Changes to be implemented from the tax year 2020-21 show the government will be limiting access to the Employment Allowance (EA). Going forward only businesses and charities with a total employer National Insurance contribution (NICs) bill of below £100,000 per annum will be eligible.
Currently there are over 1.1 million employers claiming up to £3,000 per year. This equates to somewhere in the region of 3.3 billion pounds! Around 93% of the current employers who claim Employment Allowance (EA) will still be eligible when the new rules come into force, with many of these employers not having to pay any NICs at all.
Currently Employment Allowance (EA) is claimed by the employer when they submit the Real Time Information Employer Payment Summary to HMRC. This will not change and Employers will still use their payroll software or HMRC’s basic PAYE tools.
There are some ways in which you can be restricted from claiming Employment Allowance (EA).
- If you are a director of the company and the only employee paid above the Secondary Threshold.
- You employ someone for personal household or domestic work, unless they are a care or support worker.
- You are the public body or business doing more than half of all your work in the public sector, unless you are a charity.
- You are a service company working under “IR35 Rules” and your only income is the earnings of the intermediary (Such as your personal service company, limited company or partnership).
If you have any queries regarding Employment Allowance (EA) or any other payroll queries please email: firstname.lastname@example.org