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Employment Allowance for a pub or restaurant: the £10,500 off employer National Insurance, how to claim it, and when twelve part-timers use it up
Employment Allowance takes up to £10,500 off a pub's employer National Insurance. How to claim, who is out, and twelve part-timers worked week by week.
Employment Allowance is a reduction in the employer National Insurance a pub or restaurant owes, up to £10,500 in a tax year. It is not paid out and it is not automatic: GOV.UK says it is applied against your Class 1 National Insurance each time you run payroll, until the £10,500 is used up or the tax year ends, whichever comes first. You have to tell HMRC you want it.
Who can claim and who cannot
From the GOV.UK eligibility page, you can claim if you are a business or public body and you do less than half your work in the public sector, which covers an ordinary pub, restaurant or cafe. The page lists who is out or limited:
| Situation | What the page says |
|---|---|
| Company with one director | The director cannot be the only employee liable for secondary Class 1 National Insurance |
| Group of connected companies | Only one company in the group can claim |
| More than one payroll | You can claim against only one of them |
| Staff in domestic or personal work (a nanny, a gardener) | Not counted, unless a carer or support worker |
| Someone whose earnings fall under the IR35 off-payroll rules | Not counted |
| Half or more of your work in the public sector | You do not meet the condition |
The page also says that from April 2025 employers paying more than £100,000 in Class 1 National Insurance can apply. We have not read the rules for earlier tax years, which the page says are different.
How it is claimed
Per the GOV.UK how-to-claim page, you enter "Yes" in the Employment Allowance indicator field of your next Employment Payment Summary (EPS) sent to HMRC. If your payroll software has no such field, HMRC's Basic PAYE Tools has an Employment Allowance option. It is a switch someone has to set. If your payroll shows employer National Insurance being paid in full, check that the box was ticked this tax year.
How fast twelve part-timers use it up
Employer rate for 2026/27 is 15% on pay above £96 a week (GOV.UK rates and thresholds, updated 1 September 2026). The calculation below is our own illustration, using the £12.71 National Living Wage for staff aged 21 and over.
| Step | Figure |
|---|---|
| Weekly pay, 24 hours x £12.71 | £305.04 |
| Pay above the £96 threshold | £209.04 |
| Employer NI at 15% | £31.356 a week |
| Over 52 weeks | £1,630.51 per worker |
| Twelve workers | £19,566.14 |
| Less Employment Allowance | £10,500.00 |
| Left to pay | £9,066.14 |
The allowance covers £10,500 / £1,630.51 = 6.44 of these workers. The seventh pushes you over it: seven cost £11,413.58. For twelve, weekly NI is 12 x £31.356 = £376.27, so the allowance lasts 27 weeks (27 x £376.272 = £10,159.34) and runs out during week 28 (28 x £376.272 = £10,535.62). From then on, each payroll carries the full employer National Insurance.
A team of five on the same hours costs 5 x £1,630.51 = £8,152.56, entirely covered, with £2,347.44 of the allowance never used. The pages we read say it reduces liability; we saw no wording on unused amounts, so ask your accountant whether any can be carried or refunded.
What to do
Check the claim was made. Look at the first EPS of the year, or ask your payroll provider whether the indicator is "Yes".
Know when it ends. If cash flow tightens in autumn, it may be the allowance running out. Our rota cost calculator builds employer National Insurance into the cost of each rota.
Remember tips. A service charge you pay out carries employer National Insurance too; see National Insurance on tips, service charge and tronc.
Price new starters properly. Under 21s are paid less, which lowers the NI. See hiring under 21s.
What we could not confirm
We did not read the GOV.UK "when to claim" or previous-years sections, so we cannot say whether a missed claim can be backdated. Do not rely on third-party guides for that; ask your accountant or check GOV.UK.
Overlyft can set up new AI staff who join your team and take on a weekly check of your payroll export: they would total employer National Insurance paid to date, compare it with the £10,500, and flag when it is about to run out, with you approving any change. A spreadsheet row does the same job for nothing.
Rates are those published for 2026/27 on the date shown. This is general information, not advice.
Where this comes from: GOV.UK, Employment Allowance (claim-employment-allowance, "up to £10,500", applied each payroll until used up or the tax year ends), GOV.UK, Employment Allowance eligibility page, and GOV.UK, how to claim page (Employment Payment Summary indicator), and GOV.UK, Rates and thresholds for employers 2026 to 2027 (updated 1 September 2026: 15% employer rate, £96 a week secondary threshold, Employment Allowance £10,500); all read 24 October 2026. The "when to claim" and "previous years" sections were not in the text we could read.
AEO Lookup editorial team
We write practical guides for people who run small UK firms, and we check every fact against its source on the date shown. Read how we review, or tell us if something has changed.
