Accessing the Employment Allowance 2025/26 – Hire a Worker on a Small Salary
Accessing the Employment Allowance 2025/26 – Employer National Insurance rates increased from 6 April 2025. The rate rose from 13.8% to 15%.
At the same time, the secondary threshold dropped from £9,100 to only £5,000.
That means employers now pay National Insurance on earnings above just £96 per week or £417 per month.
What is the Employment Allowance 2025/26?
The Employment Allowance lets eligible businesses reduce their employer NIC bill.
For the 2025/26 tax year, the allowance is £10,500.
But here’s the catch: companies where the only employee is also a director cannot claim it.
This affects many personal and family-run companies.
NIC Costs on a Small Salary – How It Affects You
For 2025/26, the Lower Earnings Limit (LEL) is £125 per week. A year counts as “qualifying” for state pension
only if the salary is at least £6,500 (52 x £125).
- If you pay a director £6,500 and cannot claim the Employment Allowance, NIC due = £225
- If the salary is £12,570, NIC due = £1,135.50
- No employee NIC is due between the LEL and the primary threshold
Want to avoid this NIC charge? You can do so by accessing the Employment Allowance 2025/26.
Employment Allowance Rules 2025 – How to Qualify
To claim the Employment Allowance, your company must have at least one non-director employee.
There is no minimum time or amount of NIC you must pay.
For example, hiring someone for £97 for one week is enough.
But it’s safer to hire someone like a student during holidays or a spouse on a regular part-time basis.
Once you qualify, you can reduce your NIC bill and pay the director a full £12,570 salary with no NIC or income tax due.
Reduce NIC 2025 – Use Director Resignation Strategy
If the only employee is also a director, you can’t claim the allowance.
But if someone else becomes the director, like your spouse, and you become the only employee, then your company becomes eligible.
This is a useful tip many business owners overlook when trying to reduce employer NIC in 2025/26.
Payroll Planning and Small Salary Tax Savings
- Khoob Accountancy can set up payroll correctly
- We guide you on accessing the Employment Allowance 2025/26
- We offer virtual office accounting service and full support
- We help plan director salaries to avoid overpaying NIC
Our team includes french speaking accountants in London, expert accountants in Kensington and
Barnet accountants, ready to help your business save money.
Final Thoughts
NIC costs are higher in 2025/26. But by taking on another worker – even for a short time – you can qualify for the
Employment Allowance and reduce your tax bill. Simple changes to your payroll setup can make a big difference.
Contact Khoob Accountancy today for payroll services Peterborough,
personal accounting consultancy UK, and smart ways to cut your NIC bill.
