[UK] Employment Allowance Guidance Updated

Thank you to readers who alerted us to the fact that guidance about the Employment Allowance from tax year 2020/21 has been updated.  We are not sure if this was done silently or whether the announcement passed us by. 

Regardless, the new guidance contains the following essential information for employers:

“What you'll get”

Saying that eligible employers will receive £4,000 to offset against employer’s National Insurance.

“Check if you're eligible”

This is much more detailed than before and tells us the employers that are immediately ineligible.  For the rest, it tells us that the employment allowance still has the connected rules applied to it and is now classed as “de minimis state aid”.  Helpfully, it provides examples for employers and the exchange rate (£1 = €1.1249) so employers can convert the £4,000.

“How to claim”

As far as we can see, claiming the allowance is the same as when it originally started.  But employers need to claim it otherwise they will not receive it, bearing in mind that all eligibility markers were erased from HMRC’s systems at the start of the tax year.

“When to claim”

This says that an allowance clam has to be made every year but employers can claim for past years.  This means that they do not have to make a claim in 2020/21 or can make a claim later in 2020/21.

“After you've made a claim”

This says that HMRC will write to confirm if the employer is successful in claiming and the letter must be kept now that the employment allowance counts as minimis state aid.  If the employer is rejected they will receive an automated message from HMRC.

Global Payroll Association Comment

We repeat our comment from a few weeks ago.

There is nothing to say that the Employment Allowance has to be claimed at the start of the tax year, though we appreciate that this is what many employers do.  HMRC’s guidance explicitly says “you can claim at any time in the tax year”.

The HMRC guidance on the CJRS says that the National Insurance reclaim must be adjusted by “any Employment Allowance used in that pay period”.  If it was not claimed, there can be none to use and none to offset in the calculation of the National Insurance grant.

There seems to be nothing in guidance or legislation that disallows this.

Thank you to readers who alerted us to the fact that guidance about the Employment Allowance from tax year 2020/21 has been updated.  We are not sure if this was done silently or whether the announcement passed us by. 

Regardless, the new guidance contains the following essential information for employers:

“What you'll get”

Saying that eligible employers will receive £4,000 to offset against employer’s National Insurance.

“Check if you're eligible”

This is much more detailed than before and tells us the employers that are immediately ineligible.  For the rest, it tells us that the employment allowance still has the connected rules applied to it and is now classed as “de minimis state aid”.  Helpfully, it provides examples for employers and the exchange rate (£1 = €1.1249) so employers can convert the £4,000.

“How to claim”

As far as we can see, claiming the allowance is the same as when it originally started.  But employers need to claim it otherwise they will not receive it, bearing in mind that all eligibility markers were erased from HMRC’s systems at the start of the tax year.

“When to claim”

This says that an allowance clam has to be made every year but employers can claim for past years.  This means that they do not have to make a claim in 2020/21 or can make a claim later in 2020/21.

“After you've made a claim”

This says that HMRC will write to confirm if the employer is successful in claiming and the letter must be kept now that the employment allowance counts as minimis state aid.  If the employer is rejected they will receive an automated message from HMRC.

Global Payroll Association Comment

We repeat our comment from a few weeks ago.

There is nothing to say that the Employment Allowance has to be claimed at the start of the tax year, though we appreciate that this is what many employers do.  HMRC’s guidance explicitly says “you can claim at any time in the tax year”.

The HMRC guidance on the CJRS says that the National Insurance reclaim must be adjusted by “any Employment Allowance used in that pay period”.  If it was not claimed, there can be none to use and none to offset in the calculation of the National Insurance grant.

There seems to be nothing in guidance or legislation that disallows this.