From 6th April 2020, HMRC is making changes to the criteria to claim employment allowance.
Changes to Employment Allowances
From 6th April 2020, HMRC is making changes to the criteria to claim employment allowance (EA). Employers within rural and agricultural sectors need to be aware of these changes to ensure they can comply. EA will continue to be claimed but there will no longer be an auto-renew scheme – a new claim will be necessary each year from now on.
Are You Eligible?
Eligibility to claim for EA relies on the secondary Class 1 National
Insurance Contributions (NIC) liability totalling less than £100,000 in the
previous tax year.
Deemed payments are not to be included in the total secondary
Class 1 NIC, meaning claims for the likes of self-employed workers is not
If you operate more than one payroll in the tax year leading
up to your claim, then it’s important that you add the total secondary Class 1
NIC liabilities together for each one. You then must decide which payroll is
most appropriate to claim from – not forgetting that this should be under the
However, if you run connected companies then you are
expected to add together the total employers secondary Class 1 NIC liabilities
for all the companies in the group, and then decide which company will claim.
It is not possible to claim for more than one company.
De minimis state aid
From 6th April 2020, EA will operate as de
minimis state aid. What this means is that EA will contribute towards the total
amount of state aid businesses can receive under the relevant de minimis state
aid cap in the relevant 3-year period.
This table shows the de minimis state aid ceilings for the relevant 3-year period as set by the European Commission:
What does this mean for you?
We’d advise all our clients to ensure that there is room for
the full amount of EA in their threshold. But, don’t worry because DEFRA has
already confirmed that the Basic Payment Scheme, Countryside Stewardship and
Rural Development Programme leader grants will not count towards the de-minimis
For more information on Employment Allowance changes please
do get in touch with the Brightshire team.
We’d advise all our clients to ensure that there is room for the full amount of EA in their threshold. ”