Employment Allowance
How to claim
How you claim depends on whether you use your own payroll software or HMRC’s Basic PAYE tools.
If you use your own software
To claim through your payroll software, put ‘Yes’ in the ‘Employment Allowance indicator’ field next time you send an Employment Payment Summary (EPS) to HM Revenue and Customs (HMRC).
If your payroll software does not have an Employment Payment Summary field, you can use HMRC’s Basic PAYE Tools.
If you’re claiming for a previous year
If the de minimis state aid rules apply to your business, you must select the business sectors that apply to you. You must do this even if you do not make a profit.
Most businesses will need to select the ‘Industrial/other’ category, for example a hair salon or restaurant.
If this is not true for you, select ‘No’ in response to ‘Do state aid rules apply?’
If you use HMRC’s Basic PAYE Tools
If you’re claiming for the current tax year
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Select the correct name in the ‘Employer’ menu on the home page.
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Select ‘Employment Allowance’.
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Check the eligibility criteria.
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Send your EPS as normal.
If you’re claiming for a previous tax year
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Select the correct name in the ‘Employer’ menu on the home page.
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Select ‘Employment Allowance’.
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Check the eligibility criteria.
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Answer ‘Yes’ to the question ‘Do state aid rules apply?’ if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer ‘No’.
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Send your EPS as normal.
Stopping your claim
If you stop being eligible, select ‘No’ in the ‘Employment Allowance indicator’ field in your next EPS.
Do not select ‘No’ just because:
- you’ve reached the £10,500 limit before the end of the tax year - this does not make you ineligible
- you’re no longer employing anyone - this allowance will stop at the end of the tax year
If you stop your claim before the end of the tax year (5 April), any allowance you’ve been given that year will be removed. You’ll have to pay any employers’ (secondary) Class 1 National Insurance due as a result.