Claiming employment allowance
You can only claim Employment Allowance if your total (secondary) Class 1 National Insurance contributions (NICs) liability is below (Undefined variable: General.Employ allowance threshold) in the tax year before the year of claim.
Remember, when claiming Employment Allowance, you must provide your business sector on your EPS if your business is undertaking ‘economic activity’. This applies to most businesses.
Business sectors are:
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Agriculture
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Aquaculture & Fisheries
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Road Freight Transport
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Industrial (Other, everyone else)
Industrial – You should select this sector for your business if you are undertaking economic activity which does not fall into any of the categories listed between 1-3 above. A hair salon or restaurant would choose this sector as they offer goods and services.
Choosing a sector is required as Employment Allowance is operated as a de minimis State aid. Therefore, de minimis State aid rules apply if your business is engaged in economic activity. This means providing goods or services to the market. You do not need to make a profit. If others in the market offer the same goods or services, it is an economic activity.
Only choose State aid rules do not apply on your EPS if your business does not undertake any economic activity. Some employers, for instance, charities and community amateur sports clubs, may employ someone to provide personal care. This person may not engage in economic activity, so de minimis State aid rules do not apply.
For example, if a small educational charity employs staff to teach English as a second language for free in a local community, the employers still qualify for the allowance. The allowance is not classed as a de minimis State aid in these circumstances.
If you have submitted your EA claim but need to make a correction, you can send another EPS. However, you must amend your business sector details in payroll before resending your EPS.
Report your Employment Allowance Status to HMRC