Employment Allowance: Can My Company Claim £10,500?

Employment Allowance is one of those tax breaks that's actually worth knowing about. If your company qualifies, it can reduce your Employer's National Insurance bill by up to £10,500 a year.

If you're a Gold Stag payroll client, you don't need to do anything. We check whether you're eligible and claim Employment Allowance through your payroll as standard, where you're entitled to it.

So, who can claim it?

For most small employers, it's fairly straightforward, but there's one rule that catches small limited companies out.

If you're the only director and you're also the only person earning enough for Employer's National Insurance to be due, your company can't claim Employment Allowance. Simply having another person listed on the payroll doesn't necessarily mean you qualify.

For 2026/27, the standard Employer's NI Secondary Threshold is £5,000 a year. Some employees have different rules, so don't worry about trying to work it all out yourself.

What if I have another employee?

If you're the only director and you employ someone else, your company may qualify once that other employee is earning above the relevant Employer's NI threshold. The same can apply where more than one director is paid at the appropriate level.

So it's not simply “I'm a director, therefore I can't claim.” It depends on who else is on the payroll and what they're being paid.

If things change during the year, your entitlement can change too. For example, if you take on a new employee or someone's wages increase enough to meet the rules, your company could become eligible for Employment Allowance for the whole tax year.

Do I actually get £10,500?

Not quite. HMRC isn't going to pop £10,500 into your bank account, unfortunately.

Employment Allowance reduces the Employer's National Insurance your company would otherwise have to pay. So if your Employer's NI bill for the year is £3,000, you could save £3,000. If it's high enough, you could potentially use the full £10,500 allowance.

What if I have more than one company?

There's another rule to watch here. If you have connected companies, you can't simply claim a £10,500 Employment Allowance for every company. Only one company in the connected group can claim it.

So, much like the associated-company Corporation Tax rules we've recently talked about, make sure we know about all the companies you control.

Gold Stag client? We'll sort it

If Gold Stag runs your payroll, we check your eligibility and claim Employment Allowance as standard where you're entitled to it. You don't need to apply separately or remember to ask us every April.

The main thing we need from you is to keep us updated. If you employ someone new, change someone's wages or add another director to the payroll, let us know and we'll check whether it changes anything.

Basically, you run your business and we'll deal with the boring payroll bit.