Official Statistics

Employment Allowance take-up statistics: 2020 to 2021 tax year estimate

Updated 31 January 2022

1. Summary

These statistics show Employment Allowance take-up for the 2020 to 2021 tax year, which started on 6 April 2020 and ended on 5 April 2021.

• around 1,086,000 employers benefitted from the Employment Allowance in the 2020 to 2021 tax year. Take up decreased by 9% from the previous year, likely due to policy changes which came into effect in April 2020

• in the 2020 to 2021 tax year, all parliamentary constituencies continued to have employers that benefit from the Employment Allowance

Of these employers who benefit:

• the largest three sectors account for 41% of take up, with “Wholesale and retail trade; repair of motor vehicles and motorcycles” being the largest sector at 17%

• the largest three regions account for 41% of take up, with ‘London’ having the most employers benefitting at 17%

• 86% of companies claiming the Employment Allowance are ‘Micro’ employers (1-9 employees)

2. Overview

The number of employers benefitting from the Employment Allowance has fallen to its lowest level since introduction - likely due to policies introduced in April 2020.

Table 1: Overview

Year	Employers
2014 to 2015	1,117,000
2015 to 2016	1,290,000
2016 to 2017	1,170,000
2017 to 2018	1,178,000
2018 to 2019	1,175,000
2019 to 2020	1,198,000
2020 to 2021	1,086,000

The total number of employers benefitting from the Employment Allowance has decreased by around 112,000 ( 9%) from 1,198,000 in the 2019 to 2020 tax year to 1,086,000 in the 2020 to 2021 tax year. Take-up of the relief remained stable between the 2016 to 2017 and 2019 to 2020 tax years, where there were no changes to the policy.

In April 2015, eligibility of the relief was extended to domestic employers of care and support workers likely causing the resulting rise in take-up the following tax year. In April 2016, eligibility of the relief was restricted from sole director only companies likely causing the resulting decrease in take-up the following tax year.

From April 2020, the relief was restricted to employers with an employer National Insurance contributions liability below £100,000 in the previous tax year. This has likely resulted in a decrease in take-up for the 2020 to 2021 tax year when compared to the previous tax years.

3. Sector distribution

The largest three sectors account for 41% of all employers that benefit from the Employment Allowance.

Table 2: Sector

Sector	Employers
Wholesale and retail trade; repair of motor vehicles and motorcycles	180,000
Professional, scientific and technical activities	134,000
Construction	131,000
Accommodation and food service activities	108,000
Administrative and support service activities	95,000
Other service activities	63,000
Manufacturing	59,000
Human health and social work activities	57,000
Information and communication	56,000
Transportation and storage	47,000
Activities of households as employers…	37,000
Real estate activities	28,000
Agriculture, forestry and fishing	25,000
Arts, entertainment and recreation	22,000
Education	20,000
Financial and insurance activities	17,000
Other	5,000

The largest proportion of employers benefitting from the relief are in the Wholesale and retail trade; repair of motor vehicles and motorcycles sector at 17% (180,000).

4. Region distribution

The largest three regions account for 41% of all employers that benefit from the Employment Allowance.

Table 3: Region

Region	Employers
London	185,000
South East	155,000
North West	111,000
East	106,000
West Midlands	96,000
South West	93,000
Yorkshire and The Humber	82,000
East Midlands	79,000
Scotland	74,000
Wales	44,000
North East	33,000
Northern Ireland	29,000

The largest proportion of employers benefitting from the relief are based in London at 17% (185,000). This is followed by the South East at 14% (155,000) and the North West at 10% (111,000).

3% of employers benefitting from the relief (29,000) are based in Northern Ireland.

5. Constituency distribution

Figure one shows that all parliamentary constituencies have employers that benefit from the Employment Allowance.

Figure 1: Employment Allowance Claims by Constituency

The three constituencies with the highest take-up figures are the Cities of London and Westminster with 18,200 employers benefitting, Holborn and St Pancras with 7,700 employers benefitting and Bromsgrove with 5,900 employers benefitting. A full breakdown by constituency can be found in the accompanying Employment Allowance take-up statistics: 2020 to 2021 tax year estimate ODS file.

6. Employer size distribution

The vast majority (86%) of employers that benefit from the Employment Allowance are ‘micro’ employers, who have 1-9 employees.

Table 4: Employer size

Employer size	Employers
1-9	931,000
10-49	148,000
50-249	6,000
250+	0

‘Large’ employers (employers with 250+ employees) only account for <1% (<500) of employers benefitting from the relief. This is likely to be driven by the April 2020 policy change, which restricted the Employment Allowance to employers whose employer National Insurance contributions liability is below £100,000 in the previous tax year.

Figures in the chart/table are rounded to the nearest 1,000. As there are fewer than 500 ‘large’ employers claiming the Employment Allowance, this has been rounded to 0 in the chart/table above.

7. Commentary

7.1 Disclaimer

An Official Statistics Publication

These Official Statistics are produced to high professional standards in accordance with the Statistics and Registration Service Act 2007, signifying compliance with the Code of Practice for Official Statistics. They will undergo regular quality assurance reviews to ensure that they meet customer needs and are produced free from any political interference.

7.2 Further information about the Employment Allowance

These Official Statistics provide users with information on the Employment Allowance for the 2020 to 2021 tax year. In this release, employers are classified as benefitting from the Employment Allowance if they have had an amount of the allowance offset against their Class 1 Secondary National Insurance Contributions, hereafter referred to as employer NICs, paid to HMRC.

The Employment Allowance came into effect in April 2014 and provided eligible employers with a reduction of up to £2,000 in their employer NICs liabilities. In April 2016, the allowance rose to £3,000. Initially, the allowance was available to business, charities, amateur sports clubs; and as of April 2015, domestic employers of care and support workers are also eligible to claim the allowance. As of April 2016, limited companies where the director is the only employee with paid earnings above the Secondary Threshold for NICs are no longer able to claim the allowance. Other domestic employers and public sector employers where at least 50% of their work is of a public nature are not eligible for the allowance.

As of April 2020, the allowance was targeted to employers with an employer NICs liability below £100,000 in the previous tax year and the value of the allowance was also increased to £4,000 in April 2020.

The Employment Allowance can be claimed through an employer’s payroll system which is then processed through HMRC’s PAYE Real Time Information system. An employer can claim their eligibility by submitting an Employer Payment Summary. When an employer then sends through their Full Payment Submissions when submitting their payroll, the allowance is offset against their employer NICs liabilities due on their employee(s).

Please see further guidance on the Employment Allowance.

7.3 Methodology

Number of employers

The number of employers benefitting from the Employment Allowance is taken from HMRC’s Enterprise Tax Management Platform data. An employer is defined as benefitting if they have had an amount of the allowance offset against their employer NICs liabilities.

Sector and location

Sector and location information is taken from the Business Lookup Table by matching across the Enterprise Tax Management Platform data. Sectors are defined using Standard Industry Classification codes and had a match-rate of 94%. Postcode information, used to identify regions and parliamentary constituencies, had a match-rate of 93%. The postcode used corresponds to the enterprise which is claiming the relief. Large enterprises tend to operate from multiple locations, and a single postcode may not necessarily reflect where they carry out their operations.

Employer size

Employer size information is taken from HMRC’s Real Time Information data. It is a measure of employee count corresponding to the PAYE scheme which is claiming the relief at the end of the tax year, and had a match-rate close to 100%. This may not be entirely representative of actual employer size where businesses have large fluctuations in employment over the course of the year (such as temporary summer and Christmas positions); employers may also have multiple PAYE schemes.

Caveats

• figures are rounded to the nearest 1,000 and the nearest %, apart from the constituency distribution which is rounded to the nearest 100
• sum of sector/location/employer size may not sum to the total due to rounding and negligible numbers of employers falling into smaller sectors or locations
• cases without sector/location/employer size information have been apportioned across sector/location/employer size based on the distribution of cases where sector/location/employer size information is known
• other sector includes: ‘Mining and quarrying’, ‘Electricity, gas, steam and air conditioning supply’, ‘Water supply; sewerage, waste management and remediation activities’, and ‘Public administration and defence; compulsory social security’
• “Activities of households as employers; undifferentiated goods-and services-producing activities of households for own use” has been shortened to “Activities of households as employers…”

7.4 User engagement

HMRC is committed to providing impartial quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our statistics and identify gaps in the statistics that we produce. Please see HMRC Statistics “Continuous User Engagement Strategy”.

If you would like to comment on these statistics or have any enquiries on the statistics please use the statistical contacts named on the cover page.