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Changes to Employment Allowance in 2020/21

Employment Allowance was introduced in 2014 in order to reduce the National Insurance Contribution (NIC’s) liability for small to medium businesses by £3,000. As of the 6th April 2020, the allowance is £4,000, and there are changes to the criteria which may impact your businesses eligibility.

Who is eligible?

Companies who are able to claim Employment Allowance in the 2020/21 tax year must have an Employers’ NIC liability less or equal than £100,000 in the previous tax year.

How can I find out my National Insurance Contributions (NIC)?

You can find out how much you paid in NIC’s by logging into the Government Gateway, and checking your National Insurance owed.

Will this change how I use QuickBooks Online?

Each tax year your eligibility will be re-assessed, and as such you will need to ensure to re-select Employment Allowance in product at any point throughout the tax year, but it is recommended that you do this in the first period of the new tax year.

HMRC now requires you to include your industry type, which can be found in payroll settings.

  1. Select the Company Cog.
  2. Select Accounts and Settings.
  3. On the left menu, select Payroll.
  4. Select the Employer NI relief section.
  5. If you qualify for Employment Allowance, select Yes.
  6. Select Yes if your business falls within the eligibility criteria for State Aid.
  7. Select the box that is most relevant to your business sector.
  8. Select Save.

Note: If you have roll back to the prior tax year, you will need to repeat this process.

  1. Go to  Employees or Payroll menu.
  2. Select Payroll Settings.
  3. Select HMRC Settings.
  4. If your business falls within the eligibility criteria, select Yes.
  5. Select the years relevant to your business.
  6. Select the most relevant industry to your business.

Resources

  • PAYE Gateway: https://www.gov.uk/pay-paye-tax
  • Changes to Employment Allowance: https://www.gov.uk/guidance/changes-to-employment-allowance
  • Setting up Employment Allowance in QuickBooks Online Standard Payroll: https://quickbooks.intuit.com/learn-support/en-uk/employees-and-payroll/set-up-employment-allowance-in-quickbooks-online-payroll/00/242885
  • Setting up Employment Allowance in QuickBooks Online Advanced Payroll: https://quickbooks.intuit.com/learn-support/en-uk/help-articles/hmrc-settings-in-quickbooks-online-advanced-payroll/00/253264

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