What is the Employment Allowance?
Definition of the Employment Allowance
The Employment Allowance is a reduction of up to £3,000 a year in employer's National Insurance (NI) for certain employers.
The Employment Allowance started on 6th April 2014. It is set against the employer's NI that would have been paid, up to £3,000 a year.
The Employment Allowance can't be used against PAYE or employee's NI unless an employer has overpaid employer’s NI as a result of not using the allowance.
Limited company directors who are the sole employee of their companies do not qualify for the Employment Allowance and certain other employers, such as those employing domestic workers and those whose staff carry out more than 50% of their work in the public sector (with certain exceptions), are not eligible.
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FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.