Employment Allowance guidance published – for eligible claimants from 6 April 2020

10 February 2020

HMRC has published new guidance to aid employers as they claim Employment Allowance (EA) from 6 April 2020.

Budget 2018 announced that from 6 April 2020 the EA would be restricted to employers whose secondary NIC contributions were less than £100,000 in the preceding tax year.

Due to this restriction the Employment Allowance is now considered to be de minimis state aid and will require eligible businesses to monitor and reconcile the total de minimis state aid that they receive over a three year period, which for the purposes of Employment Allowance will include, de minimis aid received in the previous two years from all sources, plus the year ahead from 6 April 2020.

A public authority that grants de minimis state aid will have provided written evidence of the amount granted and so it is important that all records relating to state aid are retained for three years. HMRC will issue such a notification to confirm that the employer has eligibility to claim Employment Allowance.

Going forward employers will need to claim EA each year, their payroll software will no longer enable them to automatically carry forward their authorisation without reconfirming their eligibility, which will be based on their secondary NICs in the preceding tax year (which  will include all secondary NIC liability for connected or group situations) as well as the amount they have been granted in de minimis state aid.

The Employment Payment Submission (EPS) will be used to indicate that an employer is making a claim and will need to include which sector the employer operates, which will be:

  • Primary production of agriculture products €20,000
  • Fisheries and aquaculture sector €30,000  
  • Road freight transport sector €100,000  
  • Other €200,000 

Class 1 secondary liability will not include the liability incurred from the ‘deemed payments’ processed for off-payroll workers.

For full information please read the HMRC guidance.

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