skip to Main Content

Spring Statement 2022: Increase in the employment allowance announced

In the Spring Statement, the Chancellor made an announcement to soften the blow of the health and care levy being introduced from April 2022 for employers.

It was announced that the employment allowance was to be increased to its highest level of £5,000 per annum up from £4,000.

As announced in April 2020 the employment allowance is restricted to those employers with a secondary Class 1 national insurance contributions liability below £100,000 in the previous tax year.

Submitting the allowance

There are a number of administrative burdens that may be too burdensome for a small employer, which could mean that some employers find it is not cost effective for them to claim the employment allowance.

For example the claim has to be submitted each tax year and will not automatically be carried forward from the previous tax year as it was pre-April 2020.

State aid

By restricting the employment allowance to smaller employers, the employment allowance is reclassified as state aid and falls within the ‘de minimis state aid’ rules for employers.

State aid is considered over a rolling three-year period, so where an employers need to provide details of the total amount of de-minimis state aid they have received or been allocated in the year of claim and in the two tax years immediately before the year of claim.

There are ceilings on how much aid a business can receive under the de-minimis rules.

If the employer is part of a group of companies, employers will have to make sure that the cumulative value of all the secondary class 1 national insurance or state aid across all the connected companies does not exceed the relevant limits for their sector.

FEATURING: Steve Ashworth
Before joining the Bristol office of PKF Francis Clark in July 2019, Steve started his career at HMRC over 30 years ago and then spent… read more
Back To Top