PAYE56010 | Employer returns: NICs employment allowance: claiming the employment allowance

Employers can claim the Employment Allowance as part of the normal RTI payroll process using the Employer Payment Summary (EPS) within their software package or within Basic PAYE Tools as a free HMRC download. Employers exempt from filing online can claim by using a paper EPS (Form RT5). The EPS will include a yes or no ‘tick box’ which employers will complete to claim.

After the employer has decided they are eligible for the Employment Allowance and selected ‘Yes’ on the EPS to claim the allowance, their Full Payment Submission (FPS) will be completed and submitted as normal. The allowance will then be offset within their software package or Basic PAYE Tools against payments of employer Class 1 NICs when they are due to be paid, until the full Employment Allowance is used up or the tax year ends (whichever is sooner).

Up until 5 April 2020 employers only needed to claim the Employment Allowance once and this would automatically apply for the tax year claimed in and subsequent tax years. From 6 April 2020 the Employment Allowance did not continue into subsequent tax years. Employers had to make a claim to Employment Allowance each tax year.

Paper filers will need to claim each year and signify that they are claiming the Employment Allowance on each paper EPS they submit.

From 6 April 2020 eligibility rules for claiming the Employment Allowance changed. Further information on eligibility from 6 April 2020 to 5 April 2025 is available at GOV.UK see Changes to Employment Allowance.

From 6 April 2025 eligibility rules for claiming the employment allowance changed. Further information on eligibility from April 2025 is available at GOV.UK see Employment Allowance