As from 2021/2022 claiming of the Employment Allowance is subject to the claimant making a correct de minimis State Aid declaration. Without making a de minimis State Aid declaration, you will not be entitled to the Employment Allowance
If you wish to claim the Employment Allowance please kindly answer the questions set by HMRC. Click on the link for more information about de minimis State Aid and Employment Allowance : https://www.gov.uk/guidance/changes-to-employment-allowance
1) Am I eligible to make a claim for Employment Allowance from April 2020 under the new Employment Allowance reform? (or) What checks do I need to do before submitting a claim for Employment Allowance through EPS?
1.1) Employers’ (secondary) Class 1 National Insurance Contributions threshold check - Was your employers' (secondary) Class 1 NICs liability less than the legislated threshold in the previous year?
- If your answer is "no" you aren't eligible.
- If you're a "connected company", you'll need to add together the total employers' (secondary) Class 1 NICs liabilities incurred by all the companies in the group. If the total amount is equal to or more than the threshold, you and the other connected companies will not be eligible to claim.
- If you're an "employer with multiple payrolls" (or who had multiple payrolls in the tax year before the year of the claim), you should add together all of the employers' (secondary) Class 1 NICs incurred by each payroll in the tax year before the year of claim to check if that amount is equal to or more than the threshold. If it is, you'll not be eligible to claim. You will need to decide which PAYE scheme to set the claim against.
You can find further info at https://www.gov.uk/government/publications/employment-allowance-more-detailed-guidance
1.2) de minimis State aid threshold check - Does your business undertake economic activity?
If De minimis State aid rules will apply to your business and you must select "YES" against which sector(s) your business falls under, choose all that apply from -
- Is Employer in the Agricultural sector?
- Is Employer in the Fisheries and Aquaculture sector?
- Is Employer in the Road Transport sector?
- Is Employer in the Industrial/Other sector?
(Not involved in Agriculture, Fisheries and Aquaculture or Road Transport sectors?)
(If your business does NOT belong to Agriculture, Fisheries and Aquaculture or Road Transport sectors, then please state YES)
- Are State-aid rules not applicable to the Employer?
(Answer : Yes, means State-aid rules are not applicable as you are not undertaking any economic activity such as Charities, CASC, Employing someone to provide personal care.)
(Answer : No, means State-aid rules are applicable, and you have indicated your economic activity by answering 'Yes' to any one of the above 4 questions)
You must ensure that when you add the full Employment Allowance in the claim year (converted to Euro) to any other de minimis State aid (already received or allocated in the claim year and previous two tax years), does not exceed the de minimis State aid threshold for the specific trade sector. If the total exceeds the threshold, you won't be eligible to claim.
You can find details of the ceilings for each sector at https://www.gov.uk/claim-employment-allowance and more information about State aid at https://www.gov.uk/guidance/state-aid
You can find the eligibility details for making an EA Claim at https://www.gov.uk/claim-employment-allowance/eligibility.
2) Can Employment Allowance for past years (earlier tax years) be claimed?
Yes, you can make a claim for the Employment Allowance up to 4 years after the end of the tax year in which the allowance applies.
For example, if you want to claim Employment Allowance for the tax year 2016-2017, you must make your claim by no later than 5 April 2021.
For more detailed information, refer to the HMRC link https://www.gov.uk/claim-employment-allowance/when-to-claim.
3) Can the unused Employment Allowance be carried forward?
The earlier you make an Employment Allowance Claim, the sooner you will get it.
In case you make a late claim and have a huge unused Allowance, you’ll need to ask HMRC to do one of the following:
- offset the unused balance against other current or future PAYE liabilities so, wherever possible, the unused balance of the allowance does not go waste.
- give you a refund of any unused balance of the allowance provided you do not have any other liabilities.
For more detailed information, refer to the HMRC link https://www.gov.uk/government/publications/employment-allowance-more-detailed-guidance/claiming-employment-allowance-further-employer-guidance.
4) How much can you claim?
An eligible employer is entitled to claim up to £4,000 in this current tax year (2021/2022). Employment Allowance will reduce your employers’ (secondary) Class 1 National Insurance liability each time you run your payroll until the £4,000 is used up, or the tax year ends, whichever is sooner.
5) When to claim for Employment Allowance?
You can claim Employment Allowance at any time during the tax year.
If you are continuing a claim from the tax year 2020/2021 to the tax year 2021/2022, you must send an EPS in month 1.
Thank you for your attention,