--- title: "Employment allowance: employer guide 2026/27" description: Save up to £10,500 on National Insurance in 2026/27. Find out if your business is eligible for the Employment Allowance and how to claim image: https://www.dhpayroll.co.uk/hubfs/cropped-top-view-male-hands-man-typing-laptop-keyboard-working-cafe-sitting-round-table%20(1).jpg --- [Skip to main content](https://www.dhpayroll.co.uk/blog/employment-allowance-employer-guide-2026/27#main) [![dhpayroll](https://www.dhpayroll.co.uk/hs-fs/hubfs/Child%20Theme%20July/logo-header.png?width=207&height=56&name=logo-header.png) ![dhpayroll](https://www.dhpayroll.co.uk/hs-fs/hubfs/Child%20Theme%20July/logo-header.png?width=207&height=56&name=logo-header.png) ![dh payroll logo](https://www.dhpayroll.co.uk/hs-fs/hubfs/dh%20payroll%20logo.png?width=50&height=36&name=dh%20payroll%20logo.png) ![dh payroll logo](https://www.dhpayroll.co.uk/hs-fs/hubfs/dh%20payroll%20logo.png?width=50&height=36&name=dh%20payroll%20logo.png)](https://www.dhpayroll.co.uk/) - [Home](https://www.dhpayroll.co.uk) - [Show submenu for About About](https://www.dhpayroll.co.uk/about-us) - 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For 2026/27, the allowance is set at **£10,500**. Recent changes have widened eligibility, meaning more employers can now benefit from the relief. A clear understanding of how the allowance works ensures [payroll](https://www.dhpayroll.co.uk/) runs accurately and businesses do not miss out on available savings.   ## What is the employment allowance The Employment Allowance reduces an employer’s **Class 1 [National Insurance](https://www.dhpayroll.co.uk/blog/national-insurance-rates-and-thresholds) liability** across the tax year. Once claimed, the allowance applies automatically through payroll. Each pay run reduces the employer NI due until either the full £10,500 is used or the tax year ends. The allowance only covers the actual liability. If the total employer NI bill is lower than £10,500, the relief is capped at that lower amount. Any unused balance does not carry forward.   ## How much is the employment allowance for 2026/27 The allowance for the 2026/27 tax year is **£10,500**. This increase reflects ongoing changes to employer National Insurance and is intended to offset part of the cost for employers, particularly those with smaller payrolls. For many businesses, the allowance removes a significant portion of the employer NI bill. For others, it reduces overall payroll costs across the year.   ### Who can claim Most employers can claim the Employment Allowance if they meet the eligibility criteria. The following employers cannot claim: ### Removal of the £100,000 eligibility cap The previous restriction based on employer National Insurance liability has been removed. Before April 2025, employers could only claim the allowance if their employer NI bill in the previous tax year was below £100,000. This condition no longer applies. Employers with larger payrolls can now claim the allowance, which has increased the number of eligible businesses.   ### Connected companies Where businesses operate within a group, the Employment Allowance can only be claimed once across the group. It cannot be split or shared between multiple companies. Companies are treated as connected where one controls another, or where both sit under common control. In these cases, the group must decide which company will claim the allowance.   ### How much could you save The value of the saving depends on the size of the employer’s National Insurance bill. | **Employer NI bill** | **Employment allowance applied** | **Saving** | | --- | --- | --- | | £3,000 | £3,000 | £3,000 | | £7,500 | £7,500 | £7,500 | | £10,500 | £10,500 | £10,500 | | £25,000 | £10,500 | £10,500 | Employers with smaller payrolls often see the greatest proportional benefit, as the allowance can remove the full liability.   ### Using the allowance with other NI reliefs The Employment Allowance applies after other National Insurance reliefs. Reliefs for younger employees, [apprentices](https://www.dhpayroll.co.uk/blog/apprenticeship-levy-employer-guide-2026/27) and qualifying veterans reduce the employer NI bill first. The allowance then applies to the remaining balance. This order increases the overall saving and ensures all available reliefs are used efficiently.   ### How to claim Employers claim the Employment Allowance through the **Employment Payment Summary (EPS)** within their payroll software. The claim must be made each [tax year.](https://www.davidhoward.co.uk/tax-services) It does not carry forward automatically. Once submitted, the allowance applies across payroll submissions and reduces the employer NI liability as the year progresses. If the employer operates [multiple payrolls](https://www.dhpayroll.co.uk/managed-payroll), the allowance can only be applied to one.   ### Late claims A claim can be made at any point during the tax year. HMRC will apply the allowance retrospectively. Any overpaid employer National Insurance will either offset future liabilities or be refunded after the year end.   ## Small employers relief Small Employers Relief operates separately from the Employment Allowance. Employers that paid less than **£45,000** in Class 1 National Insurance in the previous tax year can recover: Other employers can recover 92% of statutory payments.     ## Need support with employment allowance and payroll The Employment Allowance can reduce payroll costs, but only if it is claimed and applied correctly. dhpayroll supports employers with [payroll compliance](https://www.dhpayroll.co.uk/) and reporting, helping you apply reliefs accurately and keep your payroll running with confidence. 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