Changes to Employment Allowance

February 10, 2020

From the 6th April 2020, eligibility rules for claiming the Employment Allowance (EA) are changing. This will mean that professional bodies will need to provide updates to their members, whilst tax agents and advisers need to make sure their clients are ready for the change; this is something we will be doing following this update.

In short, the changes mean that in order to make a new EA claim, extra eligibility checks are required beforehand. Which includes checking de minimis state aid. EA will continue to be claimed through your Employer Payment Summary (EPS), but claims will not renew and you will need to remember to make a new EA claim each year.

Remember to let your payroll administrator know whether you’re eligible or not.

Key Points to Know about the employment allowance:

  • From 6 April 2020 you can only claim the EA (£3,000) if your employer’s NIC was below £100,000 in the tax year before the year of the claim. E.g. if above £100k in 2019/20 you can’t claim employment allowance in 2020/21.
  • You do not include deemed payments in your calculations (e.g. payments to off payroll workers).
  • You do add together the employer’s NIC from all payrolls and connected companies.
  • If you receive state aid, you also cannot claim the employment allowance if it takes you over the de minimis state aid ceiling for your business sector.

If you would like to discuss these changes further with a member of our team, please click here to get in contact with us.

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