More academy trusts could now benefit from the Employment Allowance – are you eligible?

Although public bodies are generally excluded from claiming the Employment Allowance, schools, academies, further education colleges, universities and early years childcare providers are entitled to claim the Employment Allowance if they are private businesses or charities. Academy trusts are therefore not specifically excluded, and some may qualify depending on how their activities are structured. With the removal of the £100,000 NICs threshold, it’s worth reviewing eligibility under the latest criteria.

We recommend academy finance teams review their position and take advice if needed, particularly as the allowance could help ease cash flow pressures caused by rising NICs costs from April 2025.

The Department for Education (DfE) has now confirmed that a National Insurance Contributions (NICs) grant will be made available for the 2025 to 2026 financial year, aimed at helping academy trusts manage the increased cost of employer NICs from April 2025.

Over £930 million in total funding will be distributed to support mainstream schools and high needs settings, with additional allocations for early years and post-16 provisions. The NICs grant will form part of the core schools budget grant (CSBG), with separate funding lines for eligible early years and post 16 provisions. 

The DfE has also published a calculator tool to help mainstream schools and academies estimate their NICs grant allocations. The grant will be calculated based on 2024–25 budgeted baselines, with allocations confirmed in July 2025.

While the funding itself will be backdated to cover the full financial year from April 2025, it won’t be paid to academy trusts until October 2025. This means trusts will need to fund the increased NICs costs from April through to October 2025 themselves, creating a potential short-term cash flow challenge.
From September 2026, the NICs funding will be rolled into ongoing CSBG allocations.

Trusts should be factoring this timing into cash flow planning, forecasting and year-end account preparation. It’s worth reviewing whether short-term reserves are sufficient to absorb the increased costs, and to update financial models accordingly.

If you’d like support estimating your NICs grant, exploring Employment Allowance eligibility, or updating your financial planning to reflect these changes, please get in touch with a member of our specialist team via the form below or contact your usual Azets adviser.