Employment Allowance
How to claim
How you claim depends on whether you use your own payroll software or HMRC’s Basic PAYE tools.
If you use your own software
To claim through your payroll software, put ‘Yes’ in the ‘Employment Allowance indicator’ field next time you send an Employment Payment Summary (EPS) to HM Revenue and Customs (HMRC).
If your payroll software does not have an Employment Payment Summary field, you can use Basic PAYE Tools.
Check if de minimis state aid rules apply to your business
De minimis state aid rules are likely to apply to your business if both of the following are true:
- your business is located in Northern Ireland
- your business manufactures or sells goods or wholesale electricity
If this is true for you, you must select the business sectors that apply to you, even if you do not make a profit. Most businesses will need to select the ‘Industrial/other’ category, for example a hair salon or restaurant.
If this is not true for you, choose ‘State aid rules do not apply’.
If you use HMRC’s Basic PAYE Tools
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Select the correct name in the ‘Employer’ menu on the home page.
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Select ‘Change employer details’.
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Select ‘Yes’ in the ‘Employment Allowance indicator’ field.
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Answer ‘Yes’ to the ‘Do state aid rules apply?’ question if de minimis state aid rules apply to you. Then select the business sectors that apply to you. Otherwise, answer ‘No’ and select ‘State aid rules do not apply’.
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Send your EPS as normal.
If you make off-payroll payments
If you’re eligible for Employment Allowance but your claim is rejected, you’ll need to call HMRC’s Employer Helpline.
Stopping your claim
If you stop being eligible, select ‘No’ in the ‘Employment Allowance indicator’ field in your next EPS.
Do not select ‘No’ just because:
- you’ve reached the £5,000 limit before the end of the tax year - this does not make you ineligible
- you’re no longer employing anyone - this allowance will stop at the end of the tax year
If you stop your claim before the end of the tax year (5 April), any allowance you’ve been given that year will be removed. You’ll have to pay any employers’ (secondary) Class 1 National Insurance due as a result.