Changes to Employment Allowance

8th April 2020

Employment Allowance can be claimed to reduce the amount of Employer National Insurance payable. The 2020/21 tax year has introduced the following changes to Employment Allowance:

  • The allowance has been increased from £3,000 per year to £4,000 per year
  • You can only claim the Employment Allowance if your total Secondary Class 1 National Insurance liability was below £100,000 in the tax year before the year you are claiming (e.g. 2019/20 tax year liability <£100,000)
  • For connected companies you should add together the total employers Secondary Class 1 NIC liabilities for all companies in the group, and if the total is below £100,000 you must decide which company will claim the allowance
  • Employment Allowance is now considered a type of De Minimis State Aid. You can only receive the £4,000 Employment Allowance if you have room under your industry ‘ceiling’ for further De Minimis State Aid. The ‘ceilings’ are as follows:

 

Business sector De minimis state aid threshold over 3 years
Primary production of agriculture products €20,000
Fisheries and aquaculture sector €30,000
Road freight transport sector €100,000
Other, industrial (everyone else) €200,000

 

–          You should have been told in writing if you have received De Minimis State Aid

 

For further guidance please click on the link below or get in touch with your usual W&P contact:

 

https://www.gov.uk/guidance/changes-to-employment-allowance

 

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