Employment Allowance

Employment Allowance (EA) is a scheme that was introduced in April 2014 which allows eligible employers to reduce their National Insurance liability by up to £5,000 for the 2023/24 tax year.

Key Current Eligibility Criteria

You can claim if:

• You’re registered as an employer with a PAYE scheme in place.
• You’re a sole trader, limited company, partnership or charity that pays employers NICs on employee’s earnings.
• You employ a care or support worker.
• You can only claim EA for one PAYE scheme.

You can’t claim if:

• Your Employers Class 1 NI liability was more than £100,000 in the previous tax year.
• Your EA claim will put you above the De minimis state aid threshold applicable to your industry sector.
• You’re a director and only paid employee in your company.
• You’re a public body or have more than 50% of income from the public sector.
• You employ someone for personal, household or domestic work (like a nanny or gardener).
• If you are part of a group of charities or companies only one member of the group can claim the allowance. Employers can choose which business or charity to claim for.

Claiming Employment Allowance

You need to make a new claim for EA every tax year. To claim EA you need to inform HMRC through your payroll software by submitting an Employment Payment Summary (EPS). This can be submitted at the start of each tax year or at any point during the tax year.

If we manage your payroll for you, each new tax year we review your EA eligibility and submit your claim to HMRC, if applicable. To find out more about our payroll services, please contact Julie Hunter on 0131 317 7377 or email Julie.hunter@jsca.co.uk

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.