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HMRC announced that from Monday 6 April 2020, the eligibility rules for claiming the Employment Allowance (EA) will change. Before you claim you will now have to make extra checks to find out if you are eligible to claim.

Secondary Class National Insurance Contributions

The first check concerns total qualifying employers’ (secondary) Class 1 NIC liability in the tax year before the year of the claim. This must be less than £100,000 and where applicable, connected companies must be factored in, to ensure this check is met.

De minimis state aid

The second check surrounds de minimis state aid. The Employment Allowance is administered as de minimis state aid and so your business will need to ensure that you have not exceeded the de minimis threshold for your sector in making the claim. There are different thresholds for different sectors.  You can check the de minimis state aid allowances on the UK Government website here.

Does the Basic Payment Scheme fall under de minimis state aid?

Many of our clients have been asking us whether or not the Basic Payment Scheme is classed as de minimis state aid, and therefore does it count towards the threshold. Information concerning state aid / de minimis aid is quite difficult to make out on the HMRC website.

The Direct Payments Bill produced by the House of Commons, however, confirms that the Basic Payment Scheme currently has state aid exemptions and so does not need to be taken into account in assessing whether the de minimis state aid threshold has been breached. Therefore, if you simply receive the Basic Payment Scheme (BPS), you will have your full de minimis threshold to apply against the Employment Allowance.

Grants and subsidies that fall under state aid

There are other subsidies and grants which also appear to fall into the exempt state aid category where businesses are operating in the agricultural sector. These include Environmental subsidies/Countryside Stewardship and the LEADER grant. For example, the 40% grants we see on the purchase of equipment e.g. direct drills. Care needs to be taken where the LEADER grant is concerned as treatment can be different depending on which category the LEADER grant falls in to.

If your business receives additional funds from the state, these will need to be considered on a case by case basis to determine if they are de minimis state aid or exempt state aid.

We can help your business

If you need help with checking your eligibility for Employment Allowance and any other state aid grants you could apply for, get in touch with our expert team today.