Employment Allowance
Employment Allowance reduces eligible employers' secondary Class 1 National Insurance bills through payroll each tax year.
Check the claim belongs to this PAYE scheme
Employment Allowance offsets eligible employers' secondary Class 1 National Insurance. It does not reduce the employee's National Insurance deduction or replace the employer's payroll calculation.
Check the organisation, employees and PAYE scheme against the current eligibility rules. Public-sector work, connected organisations, multiple payrolls, domestic employment and one-director companies can change the answer. Some workers, including those whose earnings fall within the off-payroll working rules, cannot be included in the claim.
Claim it through the EPS
Make a fresh claim for each tax year through payroll software or HMRC's Basic PAYE Tools. The HMRC claim route uses the Employment Allowance indicator on an Employer Payment Summary.
Reconcile the allowance against employer National Insurance
Payroll continues to calculate employer Class 1 National Insurance in the usual way. HMRC applies the allowance against eligible liability until the available amount is used or the tax year ends. Link payroll procedures to the current-year employer figures rather than copying an annual amount into a standing policy.
After submitting the EPS, compare HMRC's balance with the payroll liability and keep the claim evidence with that tax year's records. If eligibility ends, follow HMRC's stopping process rather than merely removing a local payroll flag.
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