Nicola Campbell

Nicola Campbell, head of accountancy and business advisory services with Azets in Glasgow, said that while larger businesses have been able since April to claim the full Employment Allowance, many are not yet taking advantage.

“This allowance has become even more valuable since the cap preventing employers with over £100,000 in NI liabilities from claiming was removed in April,” she said.

“Scottish firms could be losing out on up to £10,500 by not claiming their entitlement to the Employment Allowance.

“This relief could help reduce operational costs and is well worth the investment in the time to make the claim.”

Ms Campbell added: “Given that the announcement was made in October 2024, in advance of the change for this 2025-26 tax year, together with the fact larger employers have always been ineligible due to the NIC liability cap, many firms may have just simply overlooked the new Employment Allowance rules.”

The Employment Allowance can be claimed through payroll software or via HMRC. However, eligibility rules still apply, particularly for businesses with connected companies.

Under HMRC’s guidance, only one company within a group of connected companies can claim the allowance. This applies even if the companies cease to be connected during the tax year.

Ms Campbell said: “We often see businesses make the mistake of assuming each company can claim independently.

“It’s vital to understand the connected company rules and co-ordinate internally, so only one entity makes a claim and other companies in the group aren’t at risk of making errors, incurring unnecessary penalties or attracting scrutiny from HMRC.”

She concluded: “The halfway point of the financial year is a good time for employers to check they’re making use of the new NI Employment Allowance, and I would encourage every business to check if they have claimed and to ensure that their claim complies with the rules.”