From April 2025, more academy trusts will benefit from a valuable tax break — and it’s time to make sure you’re not missing out.
The Employment Allowance has increased to £10,500 per year, and — importantly — the previous £100,000 cap on employers’ National Insurance contributions (NICs) has been removed.
What this means for academy trusts
Previously, if your trust’s total employer NIC bill exceeded £100,000, you were excluded from claiming the allowance, which meant only the very smallest single primary trusts were able to claim the allowance. From 6 April 2025, this restriction no longer applies — so all eligible employers can now benefit.
All employers are facing an increase in their NIC for 2025/25, with the employer contribution rate rising from 13.8% to 15% and the secondary threshold (the earnings level at which employers pay NICs) dropping from £9,100 to £5,000 annually. The £10,500 is therefore a small saving against the rise in NIC costs.
Although the DfE recently announced they will be providing schools and high needs settings with over £930 million in financial year 2025 to 2026 to support them with their increased NICs costs, the funding methodology – which uses standardised rates based on pupil numbers and place-based averages, rather than each school's actual NIC bill – means schools with higher-than-average staffing costs or more staff per pupil may find that the grant does not fully offset their increased NIC liabilities. The £10,500 allowance will be particularly important for academies affected in this way.
One allowance per trust
It’s crucial to remember that even if your MATs can only claim one Employment Allowance claim across the trust. The allowance is applied at trust level, not per school or per PAYE scheme.
Where a trust operates more than one payroll it will need to decide which PAYE scheme will make the claim, and ensure it is not duplicated across connected schools or entities.
How to claim
Many trusts outsource their payroll to a specialist provider, and so the change in allowance rules should be handled on their behalf. However it will be worth checking with your provider that they are applying the rules correctly.
Increasingly we are seeing trusts take their payroll in-house. For trusts processing their own payroll the allowance will be claimed via your payroll software. Once set up, it will automatically reduce your NIC bill until the full £10,500 is used, but you’ll need to check that the software has been set up correctly and the allowance is being applied.
The next step
If you have questions about eligibility or need support setting this up then speak to your payroll provider or feel free to reach out for help to usual UHY adviser or your nearest UHY office.
The Sittingbourne UHY office in Kent provides a comprehensive payroll service to a number of academy trusts and other schools, so if you are interested in talking to us about how we can help with your payroll requirements more generally please contact us at sittingbourne@uhy-kent.co.uk.
