The HM Revenue and Customs have updated and issued its guidance on claiming the uplifted £10,500 employment allowance which can be offset against qualifying employers Secondary Class 1 Bational Insurance liabilities.
For payment from 6th April 2025, employers saw the secondary NIC starting threshold drop to £5,000 and the secondary NIC rate increase to 15%.
To help UK non public employers offset some of those increased liabilities, former limits have been removed and the amount of allowance significantly increased.
The Employment Allowance can only be used against employer Class 1 NICs liability. It can not be used against Class 1A or Class 1B NICs liabilities.
You can only claim one Employment Allowance for your business or charity even if you have multiple PAYE schemes for different parts of your business or charity.
The amount of allowance you can claim for each payment period must be the same as your employer secondary Class 1 NICs liability for the same period – subject to the £10,500 Employment Allowance annual maximum. This is because you can only use the allowance against your employer secondary Class 1 NICs when the liability arises.
You can make a claim at any time during the tax year as long as your business or charity has employer Class 1 NICs liabilities and is eligible to claim the Employment Allowance.
You must keep any records that relate to your claim, for a minimum period of 3 years after the end of the tax year in which you claimed the Employment Allowance. Your records must show:
- why you were entitled to claim the allowance
- how much allowance was used or in some circumstances repaid
- what liabilities the allowance covered
The employment allowance library
Employment Allowance: further guidance for employers
Single-director companies and Employment Allowance: further guidance
Claiming Employment Allowance: further employer guidance
Eligibility for Employment Allowance: further employer guidance
Connected companies and Employment Allowance: further guidance for employers and their agents
Connected charities and Employment Allowance: further guidance for employers and their agents
Employers of care and support workers and Employment Allowance: further employer guidance
PAYadvice.UK 8/4/2025