The Employment Allowance (introduced 6th April 2014) is a reduction in Employer’s National Insurance contributions of up to £2,000 per year. It is designed to benefit small business owners who employ staff.

Do you qualify?:

  • It applies to Sole Traders, Limited Companies and/or Partnerships who employ staff.
  • It applies to single-person Limited Companies who do not employ any other staff apart from the directors.
  • It does not apply to Sole Traders or Partnerships who do not employ any staff.
  • It does not apply if you are operating under IR35.
  • It does not apply if your business: carries out more than 50% of its work for the public
    sector within the tax year; carries out personal, household or domestic work or has more than one PAYE scheme running.

Once I qualify, will I always qualify for the allowance?

Qualification for the Employment Allowance is not a one-time thing; it can be removed if you no longer meet the qualifying criteria even part way through the year. If you cease to qualify part way through a tax year, you will need to pay back any claimed allowance for that tax year.

How do I claim the Employment Allowance?

You claim the Employment Allowance as part of your Real Time Information submission to HMRC by paying less Employer’s National Insurance than you would otherwise.