From April 2020 you’ll need to make extra checks to find out if you’re eligible to claim employment allowance. This includes checking de minimis state aid. You’ll continue to claim EA through your Employer Payment Summary but claims will not automatically renew and you’ll need to make a new claim each year.
HMRC are in the process of drafting legislation to change the Employment Allowance for employers. The main change would be that to focus the Employment Allowance on small to medium businesses in the case that employers with a liability of Class 1 secondary National Insurance of £100,000 or more in the preceding tax year will not be able to claim the Employment Allowance. In order for an employer to be able to claim the Employment Allowance for the tax year, they must have space for the full Employment Allowance within their relevant de minimis state aid threshold.
HMRC intend for this legislation to come into effect from 6th April 2020, once the regulations are published under powers in section 5 of the National Insurance Contributions Act 2014.
The Employment Allowance was introduced on 6th April 2014 by HMRC as an allowance to reduce businesses’ and charities employers’ national insurance liability for the tax year.
The employer Class 1 National Insurance contributions (NICs) would be reduced up to the maximum of the allowance in the tax year. The allowance was introduced at £2,000 in the tax year 2014-15 but it was increased to £3,000 from 6th April 2016 to the current tax year.
You will only be effected if your Class 1 NI exceeds £100,000
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