Employment Allowance allows eligible employers to reduce their annual Employers National Insurance (ERS NIC) liability by up to £4,000 for the 2020/21 tax year.
However farmers need to be aware of the important changes to the eligibility criteria for Employment Allowance from 6 April 2020 that may restrict the amount that they can claim
With effect from 6 April 2020, Employment Allowance will operate as de-minimis state aid and will contribute to the 20,000euro (approx. £17,000 at today’s exchange rates) de-minimis state aid cap for farmers in the claim year and the previous two tax years.
The maximum threshold for the farming sector is only 20,000euro. This is the total over the three years. Grant income qualifies as state aid so farmers may not be able to get the allowance.
What you need to do
To claim Employment Allowance you now need to elect to get it when you submit your weekly or monthly RTI Employer Payment Summary (EPS). It is no longer given automatically if you claimed last year.
Before you claim the allowance you’ll need to look at other de-minimis state aid that you received in the current claim year and the previous two tax years. This is the relevant 3-year period. Grant offer letters usually indicates whether the grant is de-minimis state aid.
If the total of other de-minimis state aid in the relevant 3-year period is in excess of 20,000euros you cannot claim the allowance in the current tax year.