With everything going on in the world currently it would be easy to overlook some of the changes introduced in the budget announcement just over a month ago…..we would just like to draw your attention to two important changes you should be aware of now that we are entering another tax year!
With everything going on in the world currently it would be easy to overlook some of the changes introduced in the budget announcement just over a month ago…..we would just like to draw your attention to two important changes you should be aware of now that we are entering another tax year!Employment Allowance
The Employment Allowance allows certain businesses in the UK who employ workers to reduce their annual National Insurance (NI) bill by up to £4,000. New rules on the types of businesses eligible to claim the reduction are being introduced for the 2020/21 tax year.
Prior to April 2020, organisations simply answered a ‘Yes/No’ question to inform HMRC that they were claiming the Employment Allowance. From April 2020 employers must make extra checks to work out whether they are eligible, and submit a new claim for the EA each year.
Eligibility for Employment Allowance from 6th April 2020
From 6th April 2020, the Employment Allowance will apply to smaller businesses only. Businesses with an Employer NI bill of £100,000 or more in the previous tax year (2019/20) will not be able to claim the allowance. For the 2020/21 tax year, the Employment Allowance is increasing to £4,000 (was £3,000 in the 2019/20 tax year).
The complete eligibility criteria for Employment Allowance can be found on the gov.uk website or follow the link HERE
National Insurance contribution thresholds to rise to £9,500 per year
Confirmation that the Government is increasing the threshold for when National Insurance becomes payable to £9,50
0 is good news, saving 31 million people across the UK up to £104 a year. This means those earning under £9,500 will pay no National Insurance whatsoever.
Even more welcome is the confirmation that those taken out of paying NI won’t lose out on credits towards their state pension. Anyone earning above the Lower Earnings Limit, which will increase with inflation from its current level of £6,136 will still be entitled to a year’s credit. This is important because people need at least 10 years’ credits to receive any state pension and 35 years to receive the full state pension which is expected to rise to £175.20 a week from April. Without this provision, people might have gained from paying less NI today only to suffer from a reduced state pension infuture.