Running a business can be tough enough without leaving money on the table. Yet, thousands of businesses are doing just that by failing to claim the Employment Allowance, an incentive designed to slash your National Insurance bill. Many businesses unknowingly miss out on thousands of pounds in savings each year.
What is Employment Allowance?
Employment Allowance allows eligible businesses to reduce their employer National Insurance contributions. Right now, the allowance is £5,000 per year, meaning you could save up to that amount on your payroll costs – money that could be reinvested into your business.
Big changes coming in April 2025
Here’s the game-changer. From April 2025, the Employment Allowance will increase from £5,000 to £10,500.
This is great news, but it comes with a catch.
Employers’ National Insurance contributions will rise from 13.8% to 15%, and the threshold for paying NICs will drop from £9,100 to £5,000.
These changes mean higher payroll costs for many businesses, but the increased allowance could soften the blow and is even more reason to ensure your business is claiming the allowance.
Is your Business eligible? The answer might surprise you!
If your business or charity had a Class 1 National Insurance liability of less than £100,000 in the previous tax year, you will likely qualify. However, starting in April 2025, this restriction will be lifted, making many more businesses eligible.
If you’re unsure, it’s worth checking; many employers assume they don’t qualify when they actually do. You can check your eligibility here.
You could be one of the many missing out
A decade ago, research showed that over 30% of eligible employers (according to a 2014 government study) were missing out on the Employment Allowance. Since then, additional complexities and misunderstandings around eligibility have likely increased that figure. Many businesses still assume they do not qualify or mistakenly believe their accountant or payroll provider has automatically applied for them. With rising payroll costs, ensuring you’re not missing out on this valuable benefit is more important than ever.
You can backdate your claim. Don’t miss out!
If you’ve never claimed before, you could be owed thousands. The good news? You can backdate your claim for up to four tax years. That’s potentially up to £18,000, waiting for you to claim. All it takes is submitting an Employer Payment Summary (EPS) for each year you’re claiming.
Take action now
- Check your eligibility – Don’t assume your accountant or payroll provider has done it.
- Claim ASAP – If you qualify, act quickly and start receiving the benefit
- Consider backdating – You could unlock thousands relating to previous unclaimed years.
- Get expert help – A payroll provider (like us!) can support you with your claim.
With payroll costs increasing, making the most of the Employment Allowance is more crucial than ever. Don’t let your business miss out, act now and start saving today!
