Employment Allowance (UK NIC, 2025–26)
For 2025–26, an eligible employer can claim Employment Allowance of up to £10,500 against its employer secondary Class 1 National Insurance contributions, subject to eligibility and statutory conditions. It cannot reduce the eligible liability below zero; employee contributions and Class 1A are not the same liability.
Worked example
An eligible employer has £8,000 of secondary Class 1 contributions in 2025–26 and no other relevant restriction. The allowance can reduce that liability by £8,000 to nil; the unused £2,500 does not create a payment to the employer.
Common mistake
Deducting Employment Allowance from employees’ Class 1 contributions or assuming unused allowance is automatically paid in cash.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |