Employment Allowance Reform initial equality impact assessment
Published 29 December 2020
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This publication is available at https://www.gov.uk/government/publications/employment-allowance-reform/employment-allowance-reform-initial-equality-impact-assessment
Project objectives
The Employment Allowance (EA) is being targeted at those businesses that need it most. From April 2020, the government will limit access to the EA to businesses and charities with an employer secondary class 1 National Insurance contributions (NICs) bill below £100,000 in the previous tax year.
The EA was introduced to support businesses to grow and hire new staff. At present, big businesses get the same benefit as small businesses. However, for larger businesses the benefits of this £3,000 are small relative to their total employment costs and unlikely to encourage them to take on more staff.
To focus business support on those who need it the most, the relief will be restricted to help smaller businesses with the costs of taking on more staff. As a consequence the EA will be administered according to the rules on de minimis state aid.
With effect from 6 April 2020, eligible employers will need to re-apply for EA each tax year they wish to claim the relief. They will do this by ticking the box in their payroll software each and every year they wish to claim EA.
As part of the process they will also be required to provide additional information to confirm that they are eligible to receive the allowance as de minimis state aid.
The objective is to focus business support on those who need it most.
This change better targets the relief at small businesses, by removing entitlement from larger businesses. For such businesses, a £3,000 NICs relief is marginal to their significantly larger wage bill and is unlikely to affect hiring decisions.
With a £100,000 annual employer secondary class 1 NICs threshold, this measure withdraws the EA from about £100,000 businesses, raising about £225 million annually from 2020 to 2021.
Customer groups affected
The customer groups that will be impacted by the change are:
- employers
- agents
- payroll software providers
What customers will need to do
The customer will need to understand that with effect from 6 April 2020, they will need to re-apply for EA each tax year they wish to claim the relief.
They will do this by ticking the box in their payroll software each and every year they wish to claim EA. As part of the process they will also be required to provide additional information to confirm that they are eligible to receive the allowance as de minimis state aid.
Assessing the impact
We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty; and section 75 of the Northern Ireland Act:
- racial groups,
- disabled and not disabled
- gender
- gender reassignment
- sexual orientation
- age
- religion or belief
- pregnancy and maternity
- marriage and civil partnership
- people with dependents and those without
- political opinion (for Northern Ireland only)
- people who use different languages (Including Welsh Language and British Sign Language)
We do not anticipate that there will be impacts on customers within any of the protected characteristic groups. Extra support will be provided as required.
Opportunities to promote equalities
We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group. None have been identified within the scope of this project.