There are a number of changes to Employment Allowance from 6 April 2020 that you need to be aware of that makes Employment Allowance a more complex allowance to receive than it has been previously.
The amount of Employment Allowance that you can claim has increased, from 6 April 2020 you can receive a £4,000 reduction from your employers National Insurance cost.
Another important point is that the Employment Allowance will now have to be claimed each year, existing claims will not roll forward automatically as they have previously. Also you will only be able to claim Employment Allowance if your total (secondary) Employers Class 1 National Insurance contributions liability is below £100,000 in the previous tax year.
If you have more than one payroll, add together the Employers (secondary) Class 1 National insurance contribution liability for each payroll, if you have more than one payroll (in the tax year before your claim). If the total amount is £100,000 or more you will not be eligible to claim Employment Allowance. If they are under £100,000 you should decide which one makes the claim. This also applies to companies/businesses that are connected.
And because the allowance is now restricted to smaller employers, it falls within the EU rules for ‘de minimis’ state aid (still in place until at least 1 January 2021) so employers will have to add EA to the total of all de minimis state aid the business receives to ensure the three year limit for their trade sector is not exceeded. The limit is set at €200,000 for most businesses but different limits apply for both the agriculture and fisheries sectors, and undertakings which provide a service of general economic interest.
If you would like more information on this, please give us a call!