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 2017 to 2018 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.
Off-payroll salary payments
Do not include employers’ Class 1 National Insurance liabilities on payments you make to off-payroll workers in your calculations. These are known as deemed payments. They do not count towards the £100,000 threshold.
Check if de minimis state aid rules apply to you
If you make or sell goods or services, Employment Allowance counts as ‘de minimis state aid’. There’s a limit to how much de minimis state aid you can get.
You must:
- check that you’re within the de minimis state aid threshold
- work out how much de minimis state aid you’ve received
You must do this even if you do not make a profit.
You do not have to do this if you do not make or sell goods or services, for example you’re a charity, an amateur sports club or if you employ a care worker.
Check you’re within the de minimis state aid threshold
Employment Allowance counts towards the total de minimis state aid you’re allowed to get over a 3 year period.
You must make sure you will not exceed the de minimis state aid threshold for your sector.
De minimis state aid and the relevant thresholds are worked out in euros.
| Sector | De minimis state aid threshold over 3 years |
|---|---|
| Agriculture products sector | €20,000 |
| Fisheries and aquaculture sector | €30,000 |
| Road freight transport sector | €100,000 |
| Industrial sector / other | €200,000 |
Work out how much de minimis state aid you’ve received
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Check if you’ve received any de minimis state aid - if so, you should have been told in writing.
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Add the total amount of de minimis state aid that you’ve received or been allocated for the current and past 2 tax years.
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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 2020 to 2021, you’ll need to use the exchange rate on 30 March 2020: £1 to €1.1249.
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If the total is below the threshold for your sector, you’re eligible to make a claim.
Example
In this example, the business is eligible to claim Employment Allowance because the amount of de minimis state aid they received is below the sector threshold.
Claim year - 2020 to 2021
Sector - agriculture
De minimis state aid 2018 to 2019 = €1,000
De minimis state aid 2019 to 2020 = €1,200
De minimis state aid 2020 to 2021 = €5,739 (this includes £4,000 of Employment Allowance converted into euros)
Total de minimis state aid = €7,939
This is under the €20,000 threshold for the agriculture sector.
Example
In this example, the business is not eligible to claim Employment Allowance as the amount of de minimis state aid they received is above the sector threshold.
Claim year - 2021 to 2022
Sector - agriculture
De minimis state aid 2019 to 2020 = €1,200
De minimis state aid 2020 to 2021 = €5,739 (this includes £4,000 of Employment Allowance converted into euros)
De minimis state aid 2021 to 2022 = €15,439 (this includes £4,000 of Employment Allowance converted into euros)
Total de minims state aid = €22,378
Threshold for agriculture sector = €20,000
This is above the €20,000 threshold for the agriculture sector.
If you’re a connected company, the total de minimis state aid for all of the companies in the group must be below the de minimis state aid threshold 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