Payroll Legislation

Employment allowance and De Minimis State Aid rules


Employment allowance and De Minimis State Aid rules

Due Date

Effective 6 April 2021


From 6 April 2020, HMRC are introducing new rules for claiming employment allowance. Employers whose NI bill was £100,000 or more in the previous tax year will no longer be eligible to claim employment allowance. In addition, employment allowance will be classed as De Minimis State Aid. Employment allowance cannot be rolled over from one tax into the next. The employer must apply for and declare that they are eligible each year.

Eligibility Criteria

The eligibility criteria is:

  • Must have class 1 Secondary National Insurance contributions in the previous tax year (including any connected companies) of less than £100,000.
  • Only one of the connected companies can claim the allowance.
  • Receiving the full Employment Allowance which has increased from £3,000 to £4,000 when added to any other de minimis state aid received or allocated, will not result in exceeding the de minimis state aid threshold for your business sector(s) in the relevant 3-year period (the 2 years previous and the current year). This is regardless of whether the full £4,000 is claimed.

Payroll Legislation Guide

Do you know the dates of all the complex payroll legislation changes? Are you aware of what you need to do to ensure your business is compliant? Many UK businesses aren’t aware…