Employer National Insurance Allowance – changes ahead

The Employer National Insurance allowance isn’t a new thing – it’s been around for some time but there are changes ahead.

Over the years the value of the allowance has changed and currently (tax year 24/25) sits at £5,000 per year. Eligible businesses are therefore able to offset this against their first £5,000 of Employer NI costs and it is used cumulatively through the year.

It’s key to note though that not everyone has been eligible for it with the key exceptions being:

• Sole director companies where the director is the only employee liable for secondary class 1 National Insurance (Employer NI)
• Businesses that had an Employer NI cost in excess of £100,000 in the prior tax year
• If you are part of a group of companies (also known as connected companies) the total employer NI cost combined must be less than £100,000

As part of the Autumn Statement it has been announced that the allowance figure will be increasing from £5,000 to £10,500 per year from April 2025.

Whilst this may soften the blow of the increase to the Employer National Insurance rate and the dropping of the threshold at which it becomes payable there are still some exceptions in place:

• Sole director companies where the director is the only employee liable for secondary class 1 National Insurance (Employer NI)
• The £100,000 threshold has been removed but there can still only be one claim made where companies are part of a group or classed as connected companies

To be clear though, the allowance is just an offset. If you have no Employer NI payable then there is nothing to claim. Likewise if you don’t use it all it does not create a rebate of tax just that the allowance hasn’t been fully utilised for that period.

As standard for our payroll clients we review the eligibility of making a claim for the Employer NI allowance and where clients are eligible this will be handled as part of our routine service.

Not sure how this works for you or if you are going to be impacted by the change in rates being applied? Reach out to the team today.