HMRC issue a welcome update to Employment Allowance reform

04 October 2019

HMRC has announced that payroll will not have to report the de minimis state aid figures through RTI, as was originally proposed in draft legislation.


In acknowledgement to feedback received by the CIPP and other vested stakeholders, HMRC’s Software Developer Support Team (SDST) has issued an update relating to the Employment Allowance reform proposed for April 2020.


In a positive and rational move, HMRC has agreed to alleviate some of the administrative burden payroll functions would have had to endure in relation to some of the originally intended requirements surrounding the reform. An amendment that should prompt widespread relief relates to the issue of complexities surrounding reporting on de minimis state aid figures and the currency in which it was proposed they would be reported in. HMRC have retracted both stipulations.


SDST has provided an updated RTI data items guide (V1.1) for software developers which employers and payroll practitioners may also find useful, and the following update.


“In response to feedback, HMRC can now confirm that we do not require employers to calculate and report the amount of de minimis State aid in this data item. 


Employers still need to complete business sectors:


  • Data items 199 to 202 (all that apply) for businesses undertaking economic activity, this means providing goods or services to the market. Businesses do not have to make a profit: if others in the market offer the same goods or services, it is an economic activity.  In the case of this allowance, this will apply to most businesses, or

  • Data item 203 where de minimis State aid rules do not apply to the Employer because they are not engaging in economic activity: for example charities, community amateur sports clubs, employing someone to provide personal care.

The RTI Schema for 2020/21 will not be amended, however, the amount of de minimis State aid received or anticipated (in Euros) is no longer required – if one or more of the de minimis State aid business sectors has been selected (data items 199 to 202), complete item 204 with 0.00.  If possible, software products should report 0.00 by default in these cases.


  • Any figure that is supplied in this field will be disregarded by HMRC back-end systems and will not be stored or displayed, for example in Business Tax account.

  • RTI Schema for 2021/22 will be amended to remove data items 204 and 205 completely.”


This change is of significant importance and is a win for the CIPP and payroll as a whole. The additional work that would have been required for these elements within the original draft legislation, was vocalised in the CIPP's response to the technical consultation.


Changes such as these reaffirm why it is so important that you, as members of the CIPP and the wider payroll profession, provide your views and opinions through the Policy team’s surveys and think tank roundtable meetings. It is only by providing feedback and challenging the status quo that we can together inform policy and influence the changes required.




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