Employment Allowance Changes 2020
The Employment Allowance allows certain businesses who employ workers to reduce their annual National Insurance Contributions by up to £3,000. New rules on the types of businesses eligible to claim the reduction are due to be introduced for the 2020/21 tax year.
Eligibility until 5th April 2020
Until 5th April 2020, businesses can claim a reduction in the amount of Class 1 National Insurance Contributions (NICs) they pay.
You cannot claim the Employment Allowance if you:
- Personally employ someone for domestic work (e.g. a nanny or gardener)
- Provide services in the public sector
- Provide services (e.g. IT contracting) to a public sector body.
What are the rules?
Unlike other HMRC giveaways, the Employment Allowance is an allowance. Eligible businesses may use up to the £3,000 limit every tax year.
The Employment Allowance is a £3,000 allowance per business, not per employee.
There are restrictions on connected business. Guidance is here.
Eligibility after 6th April 2020
From 6th April 2020, the Employment Allowance will apply to smaller businesses only. Businesses with an Employer NIC bill of £100,000 or more in the previous tax year will not be able to claim the £3,000 allowance.
How can I claim the Allowance?
For eligible businesses, the Employment Allowance will be automatically subtracted from Employer NICs by payroll.
Highland Payroll Services