# Employment Allowance for a recruitment agency: £10,500 off employer National Insurance, and how many temp-weeks it covers

> Employment Allowance cuts employer National Insurance by up to £10,500 in 2026-27. At £13 an hour it is used up after 165 weeks of one temp's pay.

- Page to cite: https://aeolookup.com/recruitment/employment-allowance-10500-recruitment-agency-temps-how-many-weeks-it-lasts-worked/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Recruitment agencies, Running the agency
- Published 16 October 2026
- Key fact: A temp on £520 a week costs the agency £63.60 a week in employer National Insurance (15% of the £424 above £96). £10,500 divided by £63.60 is 165.09 temp-weeks. Six temps at that pay use it up in week 28; over 52 weeks the agency pays £19,843.20 less £10,500, so £9,343.20.
- Sources: GOV.UK, Employment Allowance (claim-employment-allowance), eligibility page and Rates and thresholds for employers 2026 to 2027, all read on 16 October 2026 (allowance up to £10,500 a tax year; employer rate 15%; secondary threshold £96 a week)

A recruitment agency owner running a few temps through PAYE usually asks one thing about employer National Insurance: "is there anything I can knock off it?" There is. It is called Employment Allowance, and it is easy to forget to claim. This guide works out how quickly a temp payroll uses it up, because that tells you how much it matters to your margin.

## What GOV.UK says

I read the GOV.UK Employment Allowance pages and the 2026 to 2027 employer rates page on 16 October 2026. They say:

- Employment Allowance lets eligible employers reduce their annual employer Class 1 National Insurance bill by up to **£10,500** a tax year. The rates page confirms: "Employment Allowance for 2026 to 2027 is £10,500."
- The claim is capped at the lower of your remaining liability or £10,500. You can still claim if your bill is less than £10,500.
- Your employer Class 1 payments are reduced on each payroll run until the £10,500 is used up or the tax year ends.
- Employers paying more than £100,000 in Class 1 National Insurance can apply from April 2025.
- If your company has only one director, that director must not be the only employee liable for secondary Class 1 National Insurance.
- Only one company in a group of connected companies can claim, and you can claim against only one payroll.
- Someone you employ for personal, household or domestic work does not count, unless they are a carer or support worker.
- Employer National Insurance for category A is 15% above the secondary threshold of **£96 a week** (£417 a month, £5,000 a year).

## Our calculation: how long £10,500 lasts

A temp working 40 hours at £13 an hour earns £520 a week. The agency pays 15% on the part above £96.

1. £520 minus £96 is £424.
2. 15% of £424 is **£63.60** a week.
3. Over a full year of 52 weeks that is £3,307.20 for one temp.
4. £10,500 divided by £63.60 is **165.09** temp-weeks, which is just over three temps working all year.

| Temps on payroll at £520 a week | Employer NI a week | Week the allowance runs out | Employer NI after allowance, 52 weeks |
|---|---|---|---|
| 1 | £63.60 | beyond the year | £0 (£3,307.20 covered) |
| 3 | £190.80 | week 56, so beyond the year | £0 (£9,921.60 covered) |
| 6 | £381.60 | week 28 | £9,343.20 |
| 10 | £636.00 | week 17 | £22,572.00 |

For six temps: 27 weeks at £381.60 is £10,303.20, so £196.80 of the allowance is left for week 28 and the rest of that week is paid in full. Across the year six temps cost £19,843.20 in employer National Insurance, less £10,500, so £9,343.20. For ten temps: £636 x 52 is £33,072, less £10,500, so £22,572.

Two things follow from the numbers. First, a very small agency gets the whole of its employer National Insurance bill covered, so the saving is the full £63.60 a week per temp. Second, a larger agency gets the same £10,500 and no more, so the benefit per temp falls as headcount rises. At six temps it is worth about £1,750 a temp a year; at ten, about £1,050.

## What it does to your charge rate

If you price the allowance into every rate, the rate goes up and down with the month you are in. Most agencies do better to price National Insurance in full and treat the allowance as a saving that lands in the accounts. Our [margin calculator guide](https://aeolookup.com/recruitment/temp-margin-calculator-charge-rate-employer-costs/) shows where the cost sits in a charge rate. A temp under 21 costs no employer National Insurance below the upper threshold, so they use none of the allowance: see [the under-21 guide](https://aeolookup.com/recruitment/agency-temps-under-21-employer-national-insurance-zero-rate-50270-margin-worked/).

## Steps for the owner

1. Check the eligibility list above against your company, including any connected companies and the single-director rule.
2. Claim through your payroll software. Your payroll provider or accountant can confirm the steps.
3. Check the first payslip run after the claim shows employer National Insurance reduced.
4. Diary the week your allowance should run out, using the table, so the cost return does not surprise you.
5. Keep a note of which company in a group holds the claim.

## What I did not read

The GOV.UK pages did not say anything about agencies or temporary staff as such. I have assumed temps paid through your own PAYE scheme count like any other employees whose pay is liable to employer National Insurance, but I did not read a page that says so. I also did not read the claim steps or the pages for previous tax years. My figures are an estimate: they ignore pension, holiday pay, directors and workers over state pension age.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join your payroll team: they work out each pay run's employer National Insurance for every temp, track how much of the allowance is left and flag the week it will run out for a person to check.

This is general information, not legal or financial advice. Check GOV.UK and your payroll provider before you rely on any figure.

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General information for UK small firms, not legal, tax or financial advice.