Claiming Employment Allowance

Posted on 22nd August 2022 by Streets -  Payroll


Image to represent Claiming Employment Allowance

The Employment Allowance reduces an employer's NIC liability. The current allowance is £5,000. An employer can claim less than the maximum if this covers or eliminates their total Class 1 NIC bill. 

The allowance is only available to employers that have employer NIC liabilities of under £100,000 in the previous tax year. Connected employers or those with multiple PAYE schemes will have their contributions aggregated to assess eligibility for the allowance. The Employment Allowance can be used against employer Class 1 NICs liability. It cannot be used against Class 1A or Class 1B NICs liabilities. The allowance can only be claimed once across all employer’s PAYE schemes or connected companies. De minimis state aid rules may also apply in restricting the use of the allowance.

Employment Allowance claims need to be re-submitted each tax year. There are currently a number of excluded categories where employers cannot claim. This includes limited companies with a single director - and no other employees - as well as employees whose earnings are within IR35 ‘off-payroll working rules’.

You can also backdate your claim for the Employment Allowance for the previous four tax years.

For the tax years 2018-19 and 2019-20, it does not matter how much your employers’ Class 1 NICs liability was or how much de minimis state aid you received.

The Employment allowance was £3,000 in 2018-19 and 2019-20 and £4,000 in 2020-21 and 2021-22.


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.

Information

The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.


Expert insight and news straight
to your inbox

Related Articles


Termination payment clearance process

The tax treatment of termination payments has changed significantly over recent years. The changes have aligned the rules for tax and secondary National Insurance contributions (employer (NICs)) by making an employer liable to pay NICs on termination


More about emergency tax codes

The letters in an employee’s tax code signify their entitlement (or not) to the annual tax free personal allowance. The tax codes are updated annually and help employer’s work out how much tax to deduct from an employee’s pay packet.  The basic personal allowance for the tax year ...


A reminder that NLW and NMW rates are increasing

A reminder for our readers that the National Living Wage (NLW) and the National Minimum Wage (NMW) rates will increase with effect from 1 April 2024. The increase will see the NLW rate increased to £11.44 per hour, an increase of over £1 over the current rate of £10.42.


You might also be interested in...