Short answer
A company cannot claim the Employment Allowance if its only employee paid above the secondary threshold is a single director. With a second employee earning above that threshold, the claim becomes available.
Directors, salary & dividends
Are directors entitled to the Employment Allowance?
A company whose only employee is a single director cannot claim the Employment Allowance. When a second employee changes that and what the allowance is worth.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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A company cannot claim the Employment Allowance if its only employee paid above the secondary threshold is a single director. With a second employee earning above that threshold, the claim becomes available.
01
What the allowance is worth
02
Eligibility and traps
What the allowance is worth
The allowance reduces employer Class 1 National Insurance by up to £10,500 a year. For a small employer with a handful of staff, it often wipes out the employer NIC bill entirely.
It changes the optimal director salary. With the allowance available, a £12,570 salary costs no employer NIC in practice and gives a larger corporation tax deduction than £5,000.
Eligibility and traps
The claim is made through payroll software each tax year and does not roll forward automatically. Connected companies share one allowance between them, so a group cannot claim per company.
Where more than half of the work is for the public sector, the claim is generally not available, and the allowance does not cover Class 1A NIC on benefits.
Before you act
Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.
Local help
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Are directors entitled to the Employment Allowance?: questions directors ask
Can a two-director company claim?
Yes, if at least two directors are paid above the secondary threshold, subject to the other conditions.
Can I backdate a claim?
Yes, generally for up to four years where the conditions were met.
Does it apply to Class 1A on benefits?
No, only to secondary Class 1 NIC on earnings.
What records are needed for are directors entitled to the employment allowance?
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
How much does help with are directors entitled to the employment allowance cost?
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Can you take over are directors entitled to the employment allowance from another accountant?
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Can are directors entitled to the employment allowance be handled online?
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
Which accounting software works best for are directors entitled to the employment allowance?
We regularly work with Xero, QuickBooks, FreeAgent, Sage and connected sales or expense apps. The right setup depends on transaction volume, integrations and the reports you need, not simply the software brand.
What tax deadlines matter for are directors entitled to the employment allowance?
The relevant calendar may include annual accounts, Corporation Tax payment and return dates, confirmation statements, VAT returns, payroll submissions and Self Assessment. We map the dates from your company year end and registrations.
Is this are directors entitled to the employment allowance guidance personal tax advice?
No. This page explains general UK rules and common accounting treatment. Your facts, contracts and wider tax position must be reviewed before you rely on a conclusion.
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Check the current rules
Use official information as your reference point.
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.