The Employment Allowance remains at £10,500 for 2026/27 — and with employer National Insurance now at 15%, claiming it has never been more valuable. Use our free calculator below to check your eligibility and see exactly how much your business could save.
Employment Allowance Calculator 2026/27
Free tool — updated for the 2026/27 tax year — by Beck Hill Ltd (Beata Beck)
What Is the Employment Allowance?
The Employment Allowance is an HMRC relief that lets eligible UK employers reduce their annual employer Class 1 National Insurance Contributions (NICs) bill by up to £10,500 per tax year. It was introduced to help smaller businesses manage employment costs and encourage hiring.
The allowance is applied through your payroll software across the year. Each time you run payroll, your employer NI liability is reduced until the full £10,500 has been used, or the tax year ends — whichever comes first. If your total employer NI bill is less than £10,500, the allowance simply covers your entire liability. Any unused balance does not carry forward to the next year.
“For 2026/27 the Employment Allowance stays at £10,500 — and with employer NI now charged at 15% above a £5,000 secondary threshold, this relief is worth more in real payroll savings than at any point in its history.” — Beck Hill Ltd, April 2026
What Has Changed for 2026/27?
The headline Employment Allowance figure of £10,500 is unchanged from 2025/26. However, several important changes have taken effect that affect how the allowance works in practice:
| What Changed | 2025/26 | 2026/27 |
|---|---|---|
| Maximum Employment Allowance | £10,500 | £10,500 (unchanged) |
| Employer NI rate | 15% | 15% (unchanged) |
| Secondary NI threshold | £5,000 | £5,000 (unchanged) |
| £100,000 NI liability cap | Removed from 2025/26 | Still removed — no cap applies |
| State aid declaration on EPS | Removed from 2025/26 | Still removed — simpler claiming |
| Small Employers Relief compensation | 8.5% | 9% (increased from 6 April 2026) |
The removal of the £100,000 employer NI liability cap — which previously excluded larger payrolls from claiming — means a significantly wider range of businesses can now benefit. And the removal of the state aid declaration from the EPS form makes claiming simpler than in previous years.
Who Is Eligible for Employment Allowance in 2026/27?
Eligible employers
- Limited companies with at least one employee who is not a director
- Sole traders and partnerships with employees on payroll
- Charities and community amateur sports clubs (CASCs)
- Employers who employ care or support workers
- Connected groups of companies — but only one entity in the group can claim
Who cannot claim
- Companies where the only paid employee is also a director — the single-director exclusion remains in force for 2026/27
- Public bodies and local authorities (with limited exceptions such as parish councils)
- Employers who use the allowance to exceed the de minimis subsidy control limit (generally £260,000 over 3 years for most businesses)
- Connected groups where another entity is already claiming the allowance
⚠ The single-director rule is a common misconception. If you are a director and the only person on your company payroll — even if you pay yourself a salary — you cannot claim the Employment Allowance. You need at least one additional employee (not a director) on payroll to qualify.
How to Claim the Employment Allowance
The Employment Allowance is not applied automatically by HMRC. You must claim it each tax year through your payroll software. Here is how it works:
- Submit an Employer Payment Summary (EPS) through your payroll software with the Employment Allowance indicator set to “Yes”
- You can claim at any point during the tax year — HMRC will apply the allowance retrospectively to the start of the year
- Any employer NI already paid before you claim will be offset against future liabilities or refunded after year end
- If you operate multiple payrolls, the allowance can only be applied to one
- You do not need to declare state aid or business sector for 2026/27 — those fields have been removed from the EPS form
Tip: Claim as early as possible in the tax year. Claiming in April means the allowance begins offsetting your NI from the first pay run, maximising your cash flow benefit throughout the year.
What Can the Employment Allowance Save You?
With employer NI at 15% above the £5,000 secondary threshold, the Employment Allowance can save a substantial amount. Here are some worked examples:
| Business Scenario | Est. Annual Employer NI | EA Saving | NI Remaining |
|---|---|---|---|
| 1 employee earning £30,000 | £3,750 | £3,750 (full bill covered) | £0 |
| 3 employees averaging £28,000 | £10,350 | £10,350 (full bill covered) | £0 |
| 5 employees averaging £32,000 | £20,250 | £10,500 | £9,750 |
| 10 employees averaging £35,000 | £45,000 | £10,500 | £34,500 |
Figures are estimates based on the 15% employer NI rate above the £5,000 secondary threshold. Actual amounts will vary depending on individual salaries, part-time hours, and timing of employment.
Frequently Asked Questions
Yes. The Employment Allowance must be claimed afresh each tax year via an Employer Payment Summary (EPS). It is not carried over automatically from the previous year.
No. If the only person on your payroll is also a director, you are excluded from the Employment Allowance. You must have at least one additional employee (who is not a director) to qualify.
Yes. The restriction that previously excluded businesses with an employer NI bill over £100,000 was removed from 2025/26 and remains absent for 2026/27. All otherwise eligible employers can now claim regardless of payroll size.
Yes — you can claim retrospectively for up to four tax years. If you missed claiming in 2022/23, 2023/24, 2024/25 or 2025/26, you may be able to recover the allowance. Contact HMRC or speak to Beck Hill Ltd to help with a retrospective claim.
No. The Employment Allowance only reduces the employer’s NI liability. It has no effect on employee National Insurance contributions, take-home pay, or gross salary calculations.
Not necessarily. If Beck Hill Ltd manages your payroll, we will ensure the Employment Allowance is claimed correctly each year. If you use another provider, confirm with them that the claim has been submitted via EPS at the start of the tax year.
Need Help Claiming Your Employment Allowance?
Beck Hill Ltd manages payroll for businesses in Neath, Port Talbot, Swansea and across the UK. We will make sure your Employment Allowance is claimed correctly from day one of the tax year — saving you up to £10,500 on your employer NI bill.
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