Published On: Thu, Aug 6th, 2020

Employment allowance: What is employment allowance and who qualifies? | Personal Finance | Finance


Coronavirus has wrought damage both on public health and the general economy, leaving businesses and their employees financially unstable. Many people have relied on newly extended benefits such as Universal Credit, which have given them some breathing room as companies cut workers. But one benefit, squarely directed at companies, saw its criteria narrowed as the pandemic peaked.

What is employment allowance?

Employment allowance gives companies a chance to reduce their annual National Insurance costs.

Eligible employers can have up to £4,000 struck off their Class 1 National Insurance each year.

The reduction comes each time they run their payroll until the amount has gone or the tax year ends.

READ MORE: State pension: How a NI record can be build up without working

The way employment allowance works changed on April 6 and narrowed the scope of businesses it covers.

From the date, only small businesses with a National Insurance bill of £100,000 or less in the previous tax year.

As such, larger businesses will end up suffering the most from the new change.

The restrictions listed above have continued to apply following the changes.



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