Employment Allowance
Check if you're eligible
You can claim Employment Allowance if you’re a business or charity (including community amateur sports clubs) and your employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
You can also claim if you employ a care or support worker.
You can claim Employment Allowance for the previous 4 tax years dating back to the 2018 to 2019 tax year. Some of the rules for claiming are different.
If you’re part of a group
If you’re part of a group of charities or companies (also known as connected companies), the total employers’ Class 1 National Insurance liabilities for the group must be less than £100,000.
Only one company in the group can claim the allowance.
If you have more than one payroll
If you have or had more than one employer PAYE reference, the total employers’ Class 1 National Insurance liabilities for your combined payrolls must be less than £100,000 in the previous tax year.
You can only claim Employment Allowance against one of the payrolls.
If you make off-payroll payments
Payments to off-payroll workers (for example, contractors) are known as ‘deemed payments’. Do not include employers’ Class 1 National Insurance liabilities on deemed payments in your calculations. They do not count towards the £100,000 threshold.
Check if de minimis state aid limits apply to your business
For some businesses, Employment Allowance counts as ‘de minimis state aid’ (financial support from the government). There’s a limit to how much de minimis state aid these businesses can get over a 3 year period. If they exceed the limit, they cannot claim Employment Allowance.
De minimis state aid limits are likely to apply to your business if both of the following are true:
- your business is located in Northern Ireland
- your business makes or sells goods or wholesale electricity
If de minimis state aid limits apply to your business, you must:
- work out how much state aid you’ve received in total
- check that you’re below the limit
You must do this even if your business does not make a profit.
For more information, read the technical guidance on the UK’s international subsidy control commitments, Northern Ireland Protocol section.
Check you’re below the de minimis state aid limit
The limit depends on your business sector. It’s worked out in euros.
| Sector | De minimis state aid limit over 3 years |
|---|---|
| Agriculture products | €20,000 |
| Fisheries and aquaculture | €30,000 |
| Road freight transport | €100,000 |
| Industrial /other | €200,000 |
Work out how much de minimis state aid you’ve received
-
Check if you’ve received any de minimis state aid - if so, you should have been told in writing.
-
Add the total amount you’ve received or been allocated for the current and past 2 tax years.
-
Add this to the full amount of Employment Allowance for the year you’re claiming for. You’ll need to convert this into euros using the exchange rate for the end of the previous tax year. If you’re claiming for 2022 to 2023, you’ll need to use the exchange rate on 30 March 2022: £1 to €1.1826.
-
If the total is below the limit for your sector, you’re eligible to make a claim.
If you’re a connected company, the total de minimis state aid for all of the companies in the group must be below the state aid limit for your sector.
The rules are different if your business covers more than one sector.
Who cannot claim Employment Allowance
You cannot claim if you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you’re a charity.
You also cannot claim if both of the following apply:
- you’re a company with only one employee paid above the Class 1 National Insurance secondary threshold
- the employee is also a director of the company
Certain employees cannot be included in your claim, such as:
- someone whose earnings are within IR35 ‘off-payroll working rules’
- someone you employ for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker