Employment Allowance claims jump 16% after eligibility changes

More than 1.4 million employers benefited from the Employment Allowance during the 2025-26 tax year, according to the latest HMRC statistics, with claimant numbers rising 16% year-on-year following significant changes to employer National Insurance Contributions (NICs).

Around 1,418,000 employers claimed the relief during the year, an increase of approximately 195,000 compared with 1,223,000 in 2024-25. HMRC said the increase followed the removal of the previous £100,000 employer NICs liability cap on eligibility from April 2025, alongside wider reforms which reduced the secondary threshold from £9,100 to £5,000, increased the employer NIC rate from 13.8% to 15%, and raised the maximum Employment Allowance from £5,000 to £10,500.

Small businesses continued to account for the overwhelming majority of claims. Employers with between one and nine employees represented 85% of all recipients, with around 1.205 million businesses benefiting from the allowance. Medium-sized employers with 10 to 49 staff accounted for 188,000 claims, while just 4,000 employers with more than 250 employees claimed the relief.

By sector, wholesale and retail trade, including the repair of motor vehicles and motorcycles, recorded the highest take-up, with 227,000 employers claiming the allowance, representing 16% of all recipients. Construction followed with 186,000 claimants, ahead of professional, scientific and technical activities on 178,000.

London recorded the highest regional take-up, with 258,000 employers benefiting from the relief, equivalent to 18% of all claims. The South East followed with 202,000 employers and the North West with 151,000. HMRC’s figures also show that employers in every UK parliamentary constituency claimed the Employment Allowance during the year.