Autumn Budget 2018 – Employment Allowance Restricted

Employment allowance was introduced in the 2013 Budget and allows employers to reduce their liability for secondary Class 1 National Insurance Contributions (‘Employer NIC’) by £3,000 per annum.

From April 2020 an employer will only be entitled to claim Employment Allowance if that employer had an Employer NIC bill of less than £100,000 in the previous tax year.

The change effectively withdraws Employment Allowance for medium to large sized companies, with many employers with a gross annual wage bill of more than c.£850k affected by this change.

Given the low value of Employment Allowance, the change targets the allowance at employers who are likely to consider the relief that it gives, material.