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Haines Watts Hereford Phone icon 01432 273189

Amid all the continuing drama surrounding Brexit and England’s unsuccessful defence of the Ashes, the publication of draft legislation for new restrictions to the National Insurance (NI) employment allowance (EA) may have passed you by.

Don’t panic – allow us to explain how your business may be affected.

Let’s start with the (recent) history bit.

Since April 2014, most employers have been entitled to a deduction from their Class 1 NI bill currently worth £3,000 per year.

Next year general changes will be made to the way the allowance works and some businesses will lose their entitlement.

Published by HMRC at the end of June, the draft legislation was subject to consultation until August 20 but it’s not expected that any of the key points will change, though there may be some tweaks to ensure that the legislation achieves its objectives.

All employers will be affected in some way by the new legislation, which comes into force on April 6, 2020.

The main changes are as follows:

  • You won’t automatically qualify for the EA and you must claim it every tax year. This will involve submitting a declaration confirming that you’ve checked and are satisfied that you are eligible;
  • You won’t be entitled to EA if your liability to employers’ Class 1 NI in the previous tax year topped £100,000;
  • If you share resources such as staff and premises your eligibility must be reassessed;
  • The EA counts towards the maximum amount of state aid (£200,000) you can receive in a rolling three-year period. You must be able to accommodate the whole £3,000 EA within the limit or you will lose your entitlement to it.

If you’re unsure about how you’ll be affected by the changes to employment allowance in 2020, please contact us via the details below for straightforward advice.

Want to know more? Call us on 01432 273189 or email

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