Check if you're eligible

You can claim Employment Allowance if you’re a business or charity (including community amateur sports clubs ) and your employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year. You can also claim if you employ a care or support worker . You can claim Employment Allowance for the previous 4 tax years dating back to the 2018 to 2019 tax year. Some of the rules for claiming are different. If you’re part of a group If you’re part of a group of charities or companies (also known as connected companies), the total employers’ Class 1 National Insurance liabilities for the group must be less than £100,000. Only one company in the group can claim the allowance. If you have more than one payroll If you have or had more than one employer PAYE reference , the total employers’ Class 1 National Insurance liabilities for your combined payrolls must be less than £100,000 in the previous tax year. You can only claim Employment Allowance against one of the payrolls. If you make off-payroll payments Payments to off-payroll workers (for example, contractors) are known as ‘deemed payments’ . Do not include employers’ Class 1 National Insurance liabilities on deemed payments in your calculations. They do not count towards the £100,000 threshold. Check if de minimis state aid limits apply to your business For some businesses, Employment Allowance counts as ‘de minimis state aid’ (financial support from the government). There’s a limit to how much de minimis state aid these businesses can get over a 3-year period. If they exceed the limit, they cannot claim Employment Allowance. De minimis state aid limits are likely to apply to your business if both of the following are true: your business is located in Northern Ireland your business makes or sells goods or wholesale electricity If de minimis state aid limits apply to your business, you must: work out how much state aid you’ve received in total check that you’re below the limit You must do this even if your business does not make a profit. For more information, read the technical guidance on the UK’s international subsidy control commitments, Northern Ireland Protocol section . Check you’re below the de minimis state aid limit The limit depends on your business sector. It’s worked out in euros. Sector De minimis state aid limit over 3 years Agriculture products €20,000 Fisheries and aquaculture €30,000 Road freight transport €100,000 Industrial /other €200,000 Work out how much de minimis state aid you’ve received Check if you’ve received any de minimis state aid - if so, you should have been told in writing. Add the total amount you’ve received or been allocated for the current and past 2 tax years. Add this to the full amount of Employment Allowance for the year you’re claiming for. You’ll need to convert this into euros using the exchange rate for the end of the previous tax year. If you’re claiming for 2022 to 2023, you’ll need to use the exchange rate on 30 March 2022: £1 to €1.1826. If the total is below the limit for your sector, you’re eligible to make a claim. If you’re a connected company, the total de minimis state aid for all of the companies in the group must be below the state aid limit for your sector. The rules are different if your business covers more than one sector . Who cannot claim Employment Allowance You cannot claim if you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you’re a charity. You also cannot claim if your company has just one director and that director is the only employee liable for secondary Class 1 National Insurance . Employees you cannot include in your claim Certain employees cannot be included in your claim, such as: someone whose earnings are within IR35 ‘off-payroll working rules’ someone you employ for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker

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 . Check if de minimis state aid rules apply to your business De minimis state aid rules are likely to apply to your business if both of the following are true: your business is located in Northern Ireland your business manufactures or sells goods or wholesale electricity If this is true for you, you must select the business sectors that apply to you, 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, choose ‘State aid rules do not apply’. If you use HMRC ’s Basic PAYE Tools Select the correct name in the ‘Employer’ menu on the home page. Select ‘Change employer details’. Select ‘Yes’ in the ‘Employment Allowance indicator’ field. Answer ‘Yes’ to the ‘Do state aid rules apply?’ question if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer ‘No’ and select ‘State aid rules do not apply’. Send your EPS as normal. If you make off-payroll payments If you’re eligible for Employment Allowance but your claim is rejected, you’ll need to call HMRC ’s Employer Helpline . 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 £5,000 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.

You need to claim Employment Allowance every tax year. You can claim at any time in the tax year, but the earlier you claim the sooner you will get the allowance. If you claim late and do not use your Employment Allowance against your employers’ Class 1 National Insurance liabilities, you’ll have to ask HMRC to do one of the following: use any unclaimed allowance at the end of the year to pay any tax or National Insurance you owe (including VAT and Corporation Tax if you do not owe anything on your PAYE bill ) give you a refund after the end of the tax year if you do not owe anything You can see how much Employment Allowance you’ve used in your HMRC online account . Claiming for past years You can claim Employment Allowance for the previous 4 tax years, dating back to the 2018 to 2019 tax year. For the tax years 2018 to 2019 and 2019 to 2020, it does not matter how much your employers’ Class 1 National Insurance liability was or how much de minimis state aid you received. The thresholds for employers’ Class 1 National Insurance and de minimis state aid do not apply. Employment allowance was: £4,000 each year between 6 April 2020 and 5 April 2022 £3,000 each year between April 2016 and April 2020. Further information Read ‘ Claiming Employment Allowance: further employer guidance ’ for more information.

After you've made a claim

You can begin using your Employment Allowance as soon you submit your claim. HM Revenue and Customs ( HMRC ) will not send you a confirmation letter for your Employment Allowance. If your claim is rejected, you will receive an automated message from HMRC within 5 working days. You may need to tell HMRC if last year’s employers’ Class 1 National Insurance liabilities included deemed payments , taking you over the £100,000 threshold. When your Employment Allowance counts as de minimis state aid If you have selected a business sector in your claim, HMRC will send a letter stating that your Employment Allowance counts as de minimis state aid. You must keep this letter as you may need it if you apply for other de minimis state aid.

Employment Allowance

What you'll get

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to £5,000.

You’ll pay less employers’ Class 1 National Insurance each time you run your payroll until the £5,000 has gone or the tax year ends (whichever is sooner).

You can only claim against your employers’ Class 1 National Insurance liability up to a maximum of £5,000 each tax year. You can still claim the allowance if your liability was less than £5,000 a year.

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Employment Allowance

What you'll get

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Employment Allowance

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