Changes To The Employment Allowance From April 2020
Will you be eligible to claim?
Posted by Roger Eddowes on 04/11/2019 @ 8:00AM
There are important changes to the Employment Allowance from April 2020 and many business owners are wondering how it will affect them ...
The changes to the employment allowance mean you need to keep a close eye on your rolling cap!
copyright: olegdudko / 123rf
As of 6th April 2020, any employer with a NIC liability greater than £100,000 or are connected to other employers where cumulative secondary Class 1 contributions are £100,000 or more will not be able to claim Employment Allowance.
This is designed to benefit smaller businesses and that's why the limitations are included, so companies can only claim the Employment Allowance if their NIC liability was less than £100,000 for the previous year.
So what does that mean for the future of the Employment Allowance? Well, it means that it will be treated as a 'de minimus state aid' and businesses will need to be aware of this if they are already claiming anything else that would come under that heading.
There is a three-year cap of €200,000 on the total that can be claimed because these rules were put in place by the European Union (hence why it's in euros). As we have a 'new deal' withdrawal agreement for when we leave the EU, these rules will still apply and that's why the Government is moving forward with the changes.
Employers must ensure they have room in the rolling cap to accommodate the full Employment Allowance regardless of if they expect to use the full amount. If you're part of a group of companies, you must keep an even closer eye on it!
If you are eligible after April 2020 then you'll be able to claim up to £3,000 off your National Insurance bill by reducing your employers’ (secondary) Class 1 National Insurance each time you run your payroll, until you reach the limit or the tax year ends (whichever is soonest).
And on a final note, the Employment Allowance claim will need to be submitted each tax year as your claim will not automatically roll over from the previous year, so do ensure your payroll provider is up to speed on these changes.
Until next time ...
Would you like to know more?
Would you like to know more about the changes to the Employment Allowance? Call me on 01908 774320, leave a comment below or click here to ping over an email and let's see how I can help you.
About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
More blog posts for you to enjoy ...