Employment Allowance Changes for the 2020/21 Tax Year

Jan, 2020

The Employment Allowance has increased to £4,000 from £3,000 for eligible employers. This measure increases the maximum Employment Allowance by £1,000 to £4,000 from April 2020. This means eligible businesses and charities will be able to claim a greater reduction on their Secondary Class 1 National Insurance Contributions liability.

Employment Allowance

Employment Allowance was introduced by HMRC as an allowance to reduce a company’s national insurance liability for the tax year. From April 2020 HMRC is changing the Employment Allowance for employers. Companies with (Secondary) Class 1 NIC contributions (Employers NI) less than £100,000 are eligible to claim employment allowance but companies with more than £100,000 in the last tax year are no longer eligible to claim employment allowance. If a company intends to claim Employment Allowance then an indicator must be submitted to HMRC at the start of each tax year.

For further guidance on employment allowance click on the button below.

From April 2020, Employment Allowance will be operated as de Minimis State aid. These rules will apply if a business engages in economic activity, which means providing goods or services to the market. However, there are some companies that are outside of de minimis state aid rules. For example, charities or employing someone for personal care.

For further guidance on de minimis state aid click on the button below.