Employment Allowance

The Employment Allowance allows eligible employers claim a reduction up to £10,500 against their employers' Class 1 National Insurance liability each tax year.

It is available to all employers who meet the secondary Class 1 NICs’ eligibility criteria, if both of the following apply:

The employer is a business or public body
The employer does less than half their work in the public sector (such as for local councils and NHS services)

NB: Please ensure that you meet the eligibility criteria (particularly if you are part of a group). See HMRC's guidance.

For further and more comprehensive information on the eligibility criteria, please consult HMRC's guidance which can be accessed here

The Employment Allowance for tax year 2025-26 is £10,500.

Important Information

Since tax year 2020-21, employers are required to re-check their eligibility for Employment Allowance and submit a new claim to HMRC each tax year.

The method of claiming through the Employer Payment Summary however remains the same (see instructions below).

Where an employer is imported from 24-25 BrightPay in which employment allowance was enabled, 25-26 BrightPay will bring the above to your attention when you first access the 'HMRC Payments' utility:

Claiming the Employment Allowance in BrightPay

If you establish that you are eligible to claim the employment allowance in tax year 25-26, you will need to submit an Employer Payment Summary (EPS) submission via RTI, to notify HMRC that you are claiming the employment allowance.

To prepare an EPS for submission you must first set up your HMRC Payments schedule.

Choose HMRC Payments
Choose the agreed payment frequency between you and HMRC - monthly or quarterly
Under NIC, you will find the option for Employment Allowance Claim
To claim the Employment Allowance, select Enable

To help establish eligibility, you will first be presented with a checklist to complete - complete this according to your business circumstances.
Where it is established that you are eligible to claim the employment allowance, the claim for the employment allowance is made via an EPS. Simply click Prepare an EPS:

The Employment Allowance section on the Employer Payment Summary will now be available for you to complete.

a) Under Eligibility, indicate that the employer is eligible for Employment Allowance

Click OK to submit to HMRC.

Once the EPS has been submitted and accepted by HMRC, click back into HMRC Payments and click the Enable button again

Answer the question accordingly and click 'OK'.

The Employment Allowance will now be automatically calculated in line with the employer's Class 1 National Insurance liability each tax period, up to the maximum total of £10,500 in the tax year.