The Employment Allowance allows eligible employers claim a reduction up to £10,500 against their employers' Class 1 National Insurance liability each tax year.  

It is available to all employers who meet the secondary Class 1 NICs’ eligibility criteria, if both of the following apply:

• The employer is a business or public body
• The employer does less than half their work in the public sector (such as for local councils and NHS services)

NB: Please ensure that you meet the eligibility criteria (particularly if you are part of a group). See HMRC's guidance.

For further and more comprehensive information on the eligibility criteria, please consult HMRC's guidance which can be accessed here 
 

The Employment Allowance for tax year 2025-26 is £10,500.
 

Important Information

Since tax year 2020-21, employers are required to re-check their eligibility for Employment Allowance and submit a new claim to HMRC each tax year.

The method of claiming through the Employer Payment Summary however remains the same (see instructions below).
 

Where an employer is imported from 24-25 BrightPay in which employment allowance was enabled, 25-26 BrightPay will bring the above to your attention when you first access the 'HMRC' utility:

Claiming the Employment Allowance in BrightPay

If you establish that you are eligible to claim the employment allowance in tax year 25-26, you will need to submit an Employer Payment Summary (EPS) submission via RTI, to notify HMRC that you are claiming the employment allowance. 

To prepare an EPS for submission you must first set up your HMRC Payments schedule.
 

• HMRC must be notified of the employer's eligibility for the employment allowance via the Employment Payment Summary (EPS). 
• Select RTI on the menu bar
• Click New on the menu toolbar and select 'Employer Payment Summary (EPS)'
• Tick the 'include Employment Allowance indicator' option
• Select 'Indicate that employer is eligible for Employment Allowance'
• Click 'OK' to submit to HMRC when ready.
• Once the EPS has been submitted and accepted by HMRC, click back into HMRC.
• Under the National Insurance heading, you will find the option for Employment Allowance Claim
• To claim the Employment Allowance, select Enable
• I've sent an EPS.
• If you do not need to adjust your Employment Allowance Total claim select No and Save.
• The Employment Allowance will now be automatically calculated in line with the employer's Class 1 National Insurance liability each tax period, up to the maximum total of £10,500 in the tax year.  

If you are not eligible for the Employment Allowance

HMRC can be notified of your ineligibility for the employment allowance via the Employment Payment Summary (EPS). 

• Select RTI on the menu bar
• Click 'New' on the menu toolbar and select 'Employer Payment Summary (EPS)'

• Tick the 'include Employment Allowance indicator' option
• Select 'Indicate that employer is not eligible for Employment Allowance':

• Click 'OK' to submit to HMRC when ready.

Note: If you have enabled the Employment Allowance in the HMRC section but are not eligible, you can go to the tax month that you enabled the employment allowance claim and click on the amount in the claim field.

You will be prompted if you would like to undo your claim, you can confirm Yes to Undo.

Please note: an employer is either eligible or not eligible for the entire tax year. If an employer becomes eligible during the tax year, then all previous periods will now be eligible. Likewise, if an employer becomes ineligible during the tax year then all periods where the employment allowance was credited to the account will be undone at HMRC and the employer NIC will be liable for the whole tax year.

If you process payroll for more than 1 employer, you will need to claim Employment allowance in each employer for each tax year that they are eligible.

Note: Employer's NIC will still appear on the payslip and the RTI as this needs to be reported to HMRC. By claiming Employment Allowance via an EPS informs HMRC of the employer's eligibility. HMRC will then credit the PAYE account with the amount of Employer's NIC per tax month up to £10,500 per tax year.

To check if the EPS has been submitted to HMRC for a tax year, navigate to the RTI section and look at the submissions listed on the left hand side. You will see 'Employment Allowance Indication' on the EPS. You can check HMRC received it by checking the IR mark (View/Print HMRC receipt). If there is no EPS listed with the Employment allowance indication, then you can submit the EPS claiming the employment allowance from HMRC - this can be submitted at any point during the tax year.

You only need to submit 1 EPS claim for Employment Allowance per tax year. If your Employment Allowance claim is not being processed by HMRC, you would need to contact them directly if the submissions have been processed and accepted via BrightPay. This would be an error on HMRC side if they are not switching this setting on for the employer after a successful EPS submission claiming it via the software.

Q. Can I claim Employment Allowance for previous years in BrightPay? How do I do it?

A. Yes, it’s possible to claim Employment Allowance for the current year and up to four previous tax years in BrightPay.
To claim for a previous year:

1. Go into the relevant tax year in BrightPay.
2. Navigate to the RTI tab.
3. Click New and select EPS (Employer Payment Summary).
4. Tick the Employment Allowance indicator.
5. Submit the EPS to HMRC.

You need to complete and submit a separate claim for each tax year you wish to claim for.