The Employment Allowance (Excluded Persons) Regulations, SI 2020/218, restrict the NICs employment allowance to employers with a class 1 NICs liability below £100,000 in the preceding tax year, with effect from 6 April 2020.
The £100,000 limit will apply to the secondary class 1 NICs liabilities of individual businesses and, where there are connected employers, the cumulative secondary class 1 NICs liabilities for all those businesses.
The employment allowance will be operated as de minimis state aid, meaning employers must have space to accommodate the full £3,000 employment allowance within their available de minimis limit.
Employers will have to claim the employment allowance every year in order receive the relief, as it will no longer be carried forward from one tax year to the next.
HMRC has set out the requirements of the state aid rules in a statutory notice. Before making any deductions from their secondary class 1 NICs, employers must:
inform HMRC of the state aid sector in which they operate;
confirm their previous year’s secondary class 1 NICs liabilities were under £100,000;
declare that they have undertaken relevant checks with any connected companies; and
declare that they will not exceed the relevant de minimis state aid ceiling by claiming the full annual amount of employment allowance.
Following an announcement at Budget 2018, HMRC consulted between June and August 2019 on a first draft of the regulations and statutory notice. A final draft was published in January.
The Employment Allowance (Excluded Persons) Regulations, SI 2020/218, restrict the NICs employment allowance to employers with a class 1 NICs liability below £100,000 in the preceding tax year, with effect from 6 April 2020.
The £100,000 limit will apply to the secondary class 1 NICs liabilities of individual businesses and, where there are connected employers, the cumulative secondary class 1 NICs liabilities for all those businesses.
The employment allowance will be operated as de minimis state aid, meaning employers must have space to accommodate the full £3,000 employment allowance within their available de minimis limit.
Employers will have to claim the employment allowance every year in order receive the relief, as it will no longer be carried forward from one tax year to the next.
HMRC has set out the requirements of the state aid rules in a statutory notice. Before making any deductions from their secondary class 1 NICs, employers must:
inform HMRC of the state aid sector in which they operate;
confirm their previous year’s secondary class 1 NICs liabilities were under £100,000;
declare that they have undertaken relevant checks with any connected companies; and
declare that they will not exceed the relevant de minimis state aid ceiling by claiming the full annual amount of employment allowance.
Following an announcement at Budget 2018, HMRC consulted between June and August 2019 on a first draft of the regulations and statutory notice. A final draft was published in January.
