Employers must make additional checks this year to continue to benefit from the Employment Allowance, HM Revenue & Customs (HMRC) has warned.
The guidance, published as part of the regulator’s new monthly payroll bulletin, reminds employers that extra checks are required to work out whether they are eligible for the benefit from the 2020/21 tax year.
Additionally, a new claim for Employment Allowance must be submitted in the new tax year to continue receiving the benefit.
Under the new rules, Employment Allowance can only be claimed if “total qualifying employers’ (secondary) Class 1 NICs liability in the previous tax year was less than £100,000”.
Likewise, if an employer has multiple PAYE schemes or is part of a connected group of companies, the Employers’ (secondary) Class 1 NICs liabilities of all companies, and/or PAYE schemes, “needs to be added together to assess eligibility for Employment Allowance”.
Employers should also note that the Employment Allowance can only be claimed once across all your PAYE schemes and connected companies.
“You’ll need to decide which one PAYE scheme to set the claim against,” says HMRC.
Commenting on the guidance, the regulator added: “By targeting the allowance in this way, it means that EA will be operated as de minimis State aid. De minimis State aid rules will apply if businesses engage in economic activity, this means providing goods or services to the market, this will apply to most businesses.”
As of 06 April 2020, the Employment Allowance will be increased from £3,000 to £4,000, meaning employers will only pay National Insurance Contributions on amounts exceeding the £4,000 threshold.
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