From 2020-21, the government is limiting access to the Employment Allowance (EA) to businesses and charities with an employer National Insurance contributions (NICs) bill below £100,000.
The EA is an annual amount that is available to all businesses and charities to offset against their Class 1 secondary NICs bill. It is currently claimed by over 1.1 million employers to reduce their employer NICs bill by up to £3,000.
Around 93% of employers claiming the EA will continue to be eligible, with many paying no employer NICs at all, according to the government.
Employers currently claim the EA by submitting a Real Time Information Employer Payment Summary to HMRC. Employers will continue to claim the EA using their payroll software or HMRC’s Basic PAYE tools.
You are restricted from claiming the EA if:
• You are the director 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 a public body or business doing more than half 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).
