Employment Allowance restricted from April 2020

From 6 April 2020, the National Insurance (NIC) Employment Allowance will be restricted to just small employers who have a Class 1 NIC liability below £100,000.

The Employment Allowance (EA) is currently worth up to £3,000 per year and is available to many employers.

In the case of a group of companies, a claim is available for one employer in the group.

In the October 2018 Budget the Chancellor announced that the EA would be limited from April 2020 and said a consultation would take place. This was published in July.

Draft rules published with the consultation provide that the EA will only be available to employers who had a secondary Class 1 NIC liability below £100,000 in the previous tax year.

To be able to claim the EA, an employer will now have to have the space for the full relief of £3,000.

So, from April next year many medium-sized and large employers will no longer be able to claim the allowance, though this may not be a significant loss for many of those affected.

A final version of the rules and guidance will be published in October 2019.

Bishop Fleming urge all employers to be aware of this impending change and make any necessary changes, either in-house or with their payroll provider, to ensure that the allowance is not claimed in error after 6 April 2020 in order to avoid any action by HM Revenue & Customs.