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For the latest New Development, see ND.2740, ND.2750 and ND.2811.

Most private sector smaller businesses and charities (including CASCs, see B5.901) are given a discount on their employer contributions which is known as the employment allowance. As stated in the National Insurance Contributions (Secondary Class 1 Contributions) Bill, the employment allowance is expected to be set at £10,500 per year for tax year 2025/26 (previously it was £5,000 between 6 April 2022 and 5 April 2025, £4,000 between 6 April 2020 and 5 April 2022, £3,000 between 6 April 2016 and 5 April 2020, and £2,000 before 6 April 2016)¹ . Between 6 April 2020 and 5 April 2025, only to those employers with secondary Class 1 NIC liabilities of up to £100,000 in the previous year qualify for the employment allowance².

Employers simply keep the first £10,500 of secondary 2025/26 Class 1 NIC (£5,000 to 2024/25) that they would ordinarily have paid to HMRC each month or quarter, reporting the withholding on the relevant EPS that reconciles deductions on FPSs to amounts actually remitted