• Skip to primary navigation
  • Skip to main content
  • Skip to footer

Top notice bar

Call us on 08000 388799

Avanti Tax Accountants HomepageAvanti Tax Accountants

Bookkeeping, Accountancy and Taxation services

  • Home
  • About Us
  • Our Services
    • Bookkeeping & Accountancy
    • Corporation & Personal Tax
    • Payroll & CIS
    • Company Secretarial Bureau
    • Budgeting, Forecasting & Business Valuations
    • Mentoring & Business Coaching
    • Software & Training
  • Our Accountants
  • News & Insights
  • Send An Enquiry
Home » News & Insights » Employment Allowance Reform

Employment Allowance Reform

Posted on 26th November 2019

HMRC Logo

How will the Employment Allowance reform coming into play from April 2020 affect your business and
what are these new changes?

With effect from 6 April 2020, employers with a National Insurance contributions (NICs) liability of £100,000 or more, or employers who are connected to other employers where their cumulative secondary Class 1 NICs liability is £100,000 or more, will no longer be able to claim the Employment Allowance.

The reform has been designed to revert the Employment Allowance to benefit smaller businesses, hence the limitation that companies will only be able to claim the Allowance moving forward if their NIC liability in the previous year was less than £100,000.

De minimis State Aid

The Employment Allowance moving forward will be operated as a de minimis State Aid, meaning businesses will need to be aware if they are already claiming any other de minimis State aid(s). There is a three-year cap on the total de minimis State Aid a business can claim – this cap is €200,000 over a three-year rolling period.

Employers will need to ensure they have room on their rolling €200,000 cap to accommodate the full £3,000 Employment Allowance, regardless of whether they would use the full £3,000 allowance.

Employers who are connected must ensure that the cumulative value of all secondary Class 1 NICs or State aid across all connected companies does not exceed the relevant limits.

How can you claim if your company is eligible?

A company could get up to £3,000 a year off their National Insurance bill if they are an employer.

The allowance will reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has been reached or the tax year ends (whichever is sooner).

You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £3,000 each tax year. You can still claim the allowance if you pay less than £3,000 a year.

Employment Allowance claims will need to be submitted each tax year. Claims will not automatically roll over from the previous tax year. Look out for more information in the coming months. [1]

Useful links

Please see the below link to the consultation documents from GOV.UK:

https://www.gov.uk/government/consultations/draft-legislation-employment-allowance-eligibility-reforms

[1] Reproduced with permission of Croner Taxwise

Share this post:

Share on TwitterShare on FacebookShare on LinkedInShare on E-mail

Filed Under: Exclusive News

Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

Footer

Navigate

  • Find An Accountant
  • About Us
  • News & Insights
  • Privacy Policy
  • Letter Of Engagement

Our Services

  • Software & Training
  • Mentoring & Business Coaching
  • Budgeting, Forecasting & Business Valuations
  • Company Secretarial Bureau
  • Payroll & CIS
  • Corporation & Personal Tax
  • Bookkeeping & Accountancy

Get In Touch

Tel: 08000 388799
Send us an enquiry

  • Facebook
  • Instagram
  • Twitter
Copyright © 2023 Avanti Tax Accountants · All Rights Reserved
Part of The Maurice J Bushell & Co Ltd Franchise (UK) Ltd · Company Reg: 10407313 and The Avanti Group (UK) Ltd · Company Reg: 04635630 · Created by Purple Hippo
  • So we can contact you to discuss your enquiry
  • So a member of our team from your area can contact you
  • By clicking ‘Send Enquiry’ you agree to receive contact from Avanti Tax Accountants using the details given above. We respect your personal information and your privacy and will not share or sell your information to other organisations. Please read our Privacy Policy for more information.
  • This field is for validation purposes and should be left unchanged.