NIC Employment Allowance Changes: The Removal of the £100,000 NICs Liability Threshold
May. 13, 2025, 12:25pm
Your essential guide to understanding the current Employment Allowance and how it could benefit your business.
What is the Employment Allowance?
Employment Allowance is a government initiative designed to reduce the employer National Insurance contributions (NICs) burden. By claiming EA, eligible employers can deduct a set amount from their NICs liability, helping businesses save money.
What are the NIC Employment Allowance Changes?
Effective from 6 April 2025 for the 2025/26 tax year, the government has raised the maximum EA from £5,000 to £10,500. But perhaps the most significant update is the removal of the £100,000 NICs liability threshold for eligibility. Previously, employers with a NICs liability of £100,000 or more were excluded from claiming EA. This restriction has now been scrapped, opening the door for larger employers to benefit from the allowance.
Eligibility criteria for businesses
The removal of the £100,000 limit is a key development, particularly for mid-sized companies and larger employers. Businesses that were previously excluded due to their higher NICs liability now have access to this relief, potentially offsetting the impact of other changes to National Insurance rates.
However, as with all tax-related matters, there is small print to watch out for. Important points to consider include:
- Single director limited companies cannot claim EA if the director is the only employee paid above the secondary threshold. If, however, at least one other employee/director has earnings over the secondary threshold, such a company would be eligible to claim.
- EA cannot be claimed for domestic workers like nannies or gardeners but can be claimed for care or support workers.
- A company cannot claim EA if the business is doing more than half their work in the public sector (eg local councils, NHS services, General Practitioner services). Please note, this does not apply to charities. There are also exemptions to this where a business provides functions to a public body that are not of a public nature.
Strategic Implications
For businesses eligible to claim EA, this shift is an opportunity to revisit payroll strategies and plan for the future.
Understanding how these NIC Employment Allowance changes impact your business is crucial to maximising the benefits and staying compliant.
We can help.
Let us guide you through these changes with confidence. Reach out today – call us on 01642 878555 or email team@tindles.co.uk for expert advice tailored to your business needs.
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