Employment Allowance explained and changes from April 2022

The Employment Allowance, available since 6th April 2014, is as tax relief available to small businesses who have two or more employees on payroll, including director with one or more employees or 2 or more director employees on payroll.

The employment allowance gives tax relief on the first £5,000 of Class 1 National Insurance Contributions from April 2022. This has been increased from £4,000, partly due to the fact the Statutory Sick Pay for employees has been removed since the waning of the pandemic.

Who is eligible for Employment Allowance?

You can claim the Employment Allowance if you are a business that pays employer Class 1 NICs on your employees’ or directors’ wages via payroll.

You cannot claim if your a single director of the company or you are a company with only one employee paid above the Class 1 National Insurance secondary threshold.

For further details on eligibility, please see the HMRC guidance which may be found here. 

How can I make a claim for Employment Allowance?

You can use your own payroll software or HM Revenue & Customs’ Basic PAYE Tools (whichever you use), to claim the Employment Allowance. If your accountant or payroll bureau prepares your payroll for you, they should take care of claiming the Allowance, but it’s worth double-checking with them.

Please feel free to contact us if you would like to find out more about the tax reliefs available to you a a small business owner.