ICB’s monthly Wages Wednesday webinars have been clear that the National Insurance Contributions (Secondary Class 1 Contributions) Bill, approaching Royal Assent, makes ONLY the following changes with regard Employment Allowance for tax year 2025/26:
1. The value increases to £10,500 for eligible employers:
2. Any reference to limitations as a result of receiving State Aid is removed; and
3. The £100,000 criterion is removed (where employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year)
There are no other changes.
HMRC produces eligibility guidance, one of which is the document ‘Eligibility for Employment Allowance: further employer guidance’. This was updated on 20 March 2025 to clarify the eligibility situation for employers who are early years childcare providers. The guidance now says:
Schools, academies, further education colleges, universities and early years childcare providers are entitled to claim the Employment Allowance if they are private businesses or charities. This includes local authority or central government funded institutions provided they have charitable status.
If your institution or charity is connected to others, then there will be entitlement to just one allowance for all of the institutions or charities within the group. For example, an education trust which controls several academies will be entitled to just one allowance and it will be up to them to decide which academy makes the claim.
In January 2025, their guidance ‘Single-director companies and Employment Allowance: further guidance’ was updated in the section about limited companies not being able to claim the Employment Allowance if they have just one director and that director is the only employee liable for secondary Class 1 National Insurance. References to this change being applicable from tax year 2016/17 have been removed.
For Bookkeepers
It’s all about eligibility and, in this regard, the ONLY things that have changed is anything to do with State Aid and the £100,000 criteria. Everything else stays the same.
There are six guidance documents that are available and ICB details these:
1. ‘Single-director companies and Employment Allowance: further guidance’ (the one updated in January 2025)
2. 'Claiming Employment Allowance: further employer guidance';
3. ‘Eligibility for Employment Allowance: further employer guidance’ (the one updated on 20 March 2025);
4. ‘Connected companies and Employment Allowance: further guidance for employers and their agents’;
5. ‘Connected charities and Employment Allowance: further guidance for employers and their agents’; and
6. ‘Employers of care and support workers and Employment Allowance: further employer guidance’
