25 March 2026
The Advisory team are receiving several queries relating to Employment Allowance (EA) and whether a company can claim the allowance when there is one director and one employee on the payroll, both paid above the secondary threshold (ST), but the employee is on National Insurance (NI) category M.
Category M is not exempt and there is still a liability to pay a secondary Class 1 contribution. Although the contribution is zero, 0% is still a rate and this is confirmed in Section 9A(6) of Social Security Contributions and Benefits Act 1992.
If you have not claimed EA and think you may be eligible, you can make a claim at any point in the tax year. You are also able to claim for the previous four tax years. Further guidance can be found here: Employment Allowance: Check if you're eligible - GOV.UK.
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