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Employment Allowance allows eligible employers to reduce their annual National Insurance liability – under the scheme, you would pay less employers’ Class 1 NI each time you run your payroll until the allowance has gone or the tax year ends.

The Government has introduced a measure that has increased the maximum Employment Allowance by £1,000 from £4,000 to £5,000 from 06 April 2022.

You could be eligible if you are:

• Registered as an employer
• A Sole Trader, Limited Company or Partnership that has employees
• A Limited Company that employs only Directors, where 2 or more earn more than the secondary threshold for Class 1 NI Contributions
• Your employers’ Class 1 NI liabilities were less than £100,000 in the previous tax year

It is important to note that this does not apply to contributions where IR35 applies. You can claim Employment Allowance at any point during the tax year – the sooner you claim it, the sooner you receive the allowance.

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