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In the Budget speech, the Chancellor confirmed that the government would honour its promise to increase the Employment Allowance by a third to £4,000 from April. This represents a tax boost for almost 500,000 small businesses who can claim an increased reduction on their NIC liabilities or even reduce their bills to zero.

It had previously been announced that access to the Employment Allowance would be restricted from 6 April 2020. The new £4,000 NIC Employment Allowance will only be available to employers with employer NIC liabilities of under £100,000 in the previous tax year. Connected employers or those with multiple PAYE schemes will have their contributions aggregated to assess eligibility for the allowance.

The allowance will only be allowed to be claimed once across all employer’s PAYE schemes or connected companies. Employers will be tasked with deciding which PAYE scheme to set the claim against. Starting this April, Employment Allowance claims will also need to be submitted each tax year. This means that claims will not automatically roll over from the previous tax year as was previously the case. There are currently a number of excluded categories where employers cannot claim the employment allowance.