Claiming employment allowance means reducing your annual National Insurance liability as a business owner or employer by up to £4,000. Since April 2020, receiving employment allowance is now reliant on you making what’s known as a de minimis State Aid declaration. This may sound daunting, but we’ll break down exactly how you can do this for your business through your accountancy software. 

 

Check your eligibility 

Since April 6, 2020, Employment Allowance is now classed as de minimis state aid. There’s a limit to the amount of de minimis state aid you can receive as a business, so part of checking your employment allowance eligibility is making sure you’re still within that limit. This will vary depending on what industry you’re in. 

Other eligibility requirements for receiving Employment Allowance are: 

  • Your employer’s Class 1 National Insurance liabilities were less than £100,000 in the previous tax year 
  • You’re a company with more than one employee paid above the Class 1 National Insurance secondary threshold 
  • Your claim is made by the end of the tax year 

 

Claiming Employment Allowance on Xero 

Once you’ve verified your eligibility, you can complete the following steps in Xero to make your claim. 

  1. Click on your business name in the top left hand corner 
  2. Go to Settings
  3. Go to Payroll Settings 
  4. Click on the HMRC tab 
  5. In the bottom right hand corner, tick the box next to Yes where it says ‘claim for 2021/2022’. 
  6. Once you tick yes, you will be asked to provide an industry for your business: you can choose from Agriculture, Fisheries and Aquaculture, Road Transport, or Other. 

Congratulations! You have now submitted your claim for Employment Allowance. For more helpful tips and advice like this sent directly to your inbox every month, sign up here.