The Employment Allowance is an annual allowance which applies to a registered employer and effectively provides a NI free limit that can be applied eaxh tax year. An employer who pays its employees and triggers an Employer National Insurance contribution payment is relieved from paying employer NI contributions up to the current threshold of £2,000.
This allowance applies to Employer National Insurance contributions only and does not apply to Employee National Insurance contributions. All employee NI contributions should always be collected and paid to HMRC as normal.
An employee earning approximately £22,000 per annum would incur employer NI contributions of roughly £2,000. Applying the Employment Allowance means that this expense can be written off in full.
It is worth noting that the Employment Allowance is per employer (or business) and not per employee.
How to claim the allowance
The allowance is claimed by your accountant during the submission of RTI payroll information to HMRC.