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More support on changes to employment allowance rules

14 February 2020: new guidance has been published by HMRC and ICAEW’s Tax Faculty on changes to the employment allowance (EA) that are coming into force on 6 April.

The changes to rules mean eligibility for the allowance will be determined by reference to employer size and de minimis state aid thresholds from 6 April 2020.

For 2020/21 onwards, employers will need to make a fresh claim every year as claims will no longer automatically be rolled forward.

On 10 February, HMRC published guidance on how to claim EA under the new rules, following on from guidance it published in January on excluded persons.

Meanwhile, ICAEW’s Tax Faculty published TAXguide 02/20 (replacing TAXguide 15/19) which explains the changes together with the details concerning how employers will claim EA through their real-time information submissions from April 2020.

The Faculty highlights that the draft regulations say that EA should be converted into euros using the exchange rate quoted by the European Central Bank for the second to last day of March in the previous tax year, or, if no rate is quoted for that date, the rate quoted for the closest day to that date for which a rate is quoted (rather than an April exchange rate as noted in HMRC’s guidance).