{"id":565,"date":"2025-03-18T08:24:31","date_gmt":"2025-03-18T09:24:31","guid":{"rendered":"http:\/\/portraitsbylorie.com\/?p=565"},"modified":"2025-03-19T16:47:21","modified_gmt":"2025-03-19T16:47:21","slug":"what-is-employment-allowance-national-insurance-reduction-explained","status":"publish","type":"post","link":"http:\/\/portraitsbylorie.com\/index.php\/2025\/03\/18\/what-is-employment-allowance-national-insurance-reduction-explained\/","title":{"rendered":"What is Employment Allowance? National Insurance reduction explained"},"content":{"rendered":"

UK employers are awaiting 6 April with dread. Come Spring, the main rate of employer National Insurance Contributions (NICs) is set to rise<\/a> from 13.8% to 15%<\/strong>.<\/p>\n

Meanwhile, the secondary threshold—the point at which employers start paying NICs on employee wages—will also drop from £9,100 to £5,000 annually. SMEs have already begun to scale back their growth plans, with nearly a fifth planning to cut jobs<\/a>.<\/p>\n

It’s far from a gift for organisations, many of which are already feeling financial pressure. But in a very small silver lining for business owners, Employment Allowance is also set to increase, somewhat easing the financial pressure of upcoming tax rises.<\/p>\n

What is Employment Allowance?<\/h2>\n

Employment Allowance is a scheme designed to help eligible employers reduce their annual secondary Class 1 National Insurance<\/a> contributions. This allowance serves as a deduction from your yearly employer NIC bill.<\/p>\n

Currently, the Employment Allowance allows qualifying employers to cut their National Insurance contributions by up to £5,000 each tax year. But also from April 6 2025, this allowance is set to more than double<\/a>.<\/p>\n

As a result, eligible employers will now be able to reduce their Class 1 National Insurance liability by up to £10,500. <\/strong><\/p>\n

Who can claim Employment Allowance?<\/h2>\n

In last year’s Autumn Budget, chancellor Rachel Reeves announced the increase in the Employment Allowance, plus the removal of a significant restriction for the scheme.<\/p>\n

Until now, businesses could only qualify for the Employment Allowance if they had a secondary Class 1 National Insurance liability of less than £100,000. However, starting from April 6, this cap will be completely lifted.<\/p>\n

The change broadens the eligibility criteria for Employment Allowance significantly. From April, most businesses and charities can claim the allowance as long as they:<\/p>\n