Employment Allowance: Tax Relief on National Insurance – 07/03/2022

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Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £4,000. Under the scheme, you would pay less employers’ Class 1 NI each time you run your payroll until the £4,000 has gone or the tax year ends.

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.

The Government have helpful guidance on Employment Allowance and how to claim which you can read here!

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