Employers Allowance Changes from April 2020

Since April 2014, certain businesses are eligible to claim an Employment Allowance. This allowed businesses to reduce their employer National Insurance bill by up to £3,000.

From 6 April 2020, this is being increased to £4000pa but there are also changes that mean larger businesses who currently benefit will not be able to claim the allowance in the 2020/21 tax year.

Current Criteria

Up until 5 April 2020, most businesses can claim a reduction.  Single director only employees are ineligible, and you cannot claim the allowance if you personally hire someone for domestic work, such as a nanny or a gardener, or you carry out more than 50% of your work in or for the public sector.

Further guidance on eligibility for employment allowance is available on the gov.uk website.

The Key Changes

• After the 6th April 2020, only small businesses with an employer NI bill of £100,000 or less will be eligible to claim the Employment Allowance.
• You will not automatically qualify for Employers Allowance. It must be claimed now each tax year by submitting a declaration.
• The Employers allowance will be classed as state aid and counts towards the maximum aid you can receive in a rolling three-year period. You must have room to accommodate the £3,000 Employers Allowance within state aid limit or lose your entitlement to it.

How can I claim the Allowance?

For businesses that are eligible, the Employment Allowance will be subtracted from their Employer NIC liability.

Highland Payroll Services will deal with the claim on customers’ behalf.