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Changes to Employment allowance

From April 2020 there will be  restrictions on who can claim Employment Allowance. Payroll

This will be limited to employers who had a secondary Class 1 NIC liability below £100,000 in the previous tax year; if you exceeded this you are no longer eligible.

This means that the impending changes will exclude around 100,000 employers from the allowance, most of which are from medium to large sized firms (depending on individual company NIC liabilities).

99% of micro-businesses and 93% of small businesses will not be affected by this change and will still be eligible for allowance.

EA (employment allowance) is currently worth up to £3,000 a year per employer, however Employment allowance will be changing to a type of ‘State Aid’ from April 2020. Business owners will consequently have to claim the allowance each year stating their eligibility to HMRC. Make sure you do this to avoid missing out on credits that you’re entitled to.

The reason for this development is that the previous classification for eligibility placed some businesses (larger companies) in an advantageous position over others, leading to potentially distorted competition and trade within the European Union.

The changes to the allowance outlined above could mean you are no longer eligible for the £3,000 claim. It is therefore essential for employers to be aware of this change as of 6 April 2020 to ensure that you do not claim in error.

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Posted in: Staff - Payroll