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 possible.

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 £100,000 threshold.

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 limit.

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. ”

Suzanne Preston

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