Payroll News

Employment Allowance changes from 2020 is open for discussion

Let us hear your thoughts...

I'll be hosting a CIPP think tank session on 9th August in Carlisle to discuss the changes published, due to come into force from April 2020⁠.

Please do spare some time to read about the changes detailed below. 

I'm interested in the views of Armstrong Watson clients, especially those we provide payroll services to, on what you would expect from the payroll team.

Currently, the Armstrong Watson payroll team assist employers in determining whether they can benefit from the employment allowance, and if eligible, the team then apply the allowance and unless circumstances change the allowance continues to run year on year.

However. this is all set to change! Only small employers with secondary NICs of less than £100,000 will qualify for the employment allowance.  Unfortunately it doesn’t end there as the Government also have plans to introduce reporting and qualifying conditions that would not currently fall under the payroll remit.  This leaves the payroll profession concerned as to how we can help employers understand whether they can qualify and implement the changes.

Key changes, highlighted by the CIPP’s policy team include:

De minimis State Aid

As part of the restriction of eligibility for Employment Allowance (EA) from April 2020 (it will only be available to employers with a secondary NICs liability below £100K in the previous tax year), EA will be reclassified as State Aid.

Employers will need to ensure that any EA claimed does not take them over the State Aid limit for the sector in which they operate. 

The State Aid sectors are:

  • Agriculture,
  • Fisheries and aquaculture,
  • Road haulage
  • Other (industry)

Reporting

The draft regulations (The Employment Allowance (Excluded Persons) Regulations 2019), as written, will bring about significant reporting and administrative challenges to payroll processes for employers reporting via RTI who will continue to claim the Employment Allowance from April 2020.

Employers will need to report the following details through RTI on the Employer Payment Summary (EPS):

  • Employment Allowance Indicator (already present on the EPS)
  • The State Aid sector in which they operate
  • The amount of State Aid allocated in the current tax year, plus the amount of State Aid claimed in the previous two tax years. The value is to be expressed in Euros, using an exchange rate published by HMRC on 1 April.

The declaration will no longer be able to be carried over – by virtue of the £100k secondary NICs exclusion level – this question will need to be considered and declared, each tax year.

How can you join the think tank discussion?

The think tank discussion will bring together payroll professionals to share concerns and ideas as to how we can implement these changes and continue to assist employers.  HMRC’s policy team will also be in attendance.

The CIPP will be sending out invitations but if you are a member of the CIPP and would like to attend, then please contact policy@cipp.org.uk and register your interest no later than 5th August.

If you are not a member but you wish to share your views with me, please contact me directly at karen.thomson@armstrongwatson.co.uk.

Finally, I am very keen to hear from existing payroll clients on what your expectations would be from the payroll team, so please do get in touch before 9th August.

If you would like to find out more, please get in touch with Karen Thomson on 0808 144 5575.

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