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Is Your Business Entitled to the Employment Allowance?

by Thomas Nock Martin | Aug 09, 2022 | Employment

Is your Business eligible for Employer Allowances 2022? - TNMCA - financial advisors in Birmingham UK

Summary. Employer allowances for 2022 have increased by £1,000, offering relief from a 1.25% National Insurance hike. Thomas Nock Martin, financial advisors in Birmingham, detail the eligibility criteria for this scheme, including constraints for multiple businesses, National Insurance boundaries, and director setups.


Employer National Insurance Contributions (NICs) determine the Employment Allowance (EA) at £5,000. Qualifying employers must claim this money sum at the end of each tax year. But are you eligible to claim for employer allowances? Please continue reading for more information on this scheme brought to you by our financial advisors in Birmingham, UK.

Here at Thomas Nock Martin in Brierley Hill, we, as chartered accountants, stay up to date with all tax and financial news to provide the best guidance to our clients. With many schemes available, it’s essential to understand your rights as a business so that you get the most out of government funding.

Employer Allowances in 2022

What is the employer allowance in 2022? For this tax year in 2022, employers have been given a £1,000 increase compared to the previous £4,000. This is to offer some relief from the 1.25% increase in employer contributions to National Insurance that took effect in April 2022. This significant rise has now left a calculation of 15.05% to be contributed.

Are you eligible for EA?

The Employer Allowances tax relief scheme allows smaller employers to reduce their National Insurance bills. Several factors can determine your entitlement to EA, which our financial advisors in Birmingham have given further detail on below:

Multiple Businesses

If your business or charity is connected to one or more others, only one will be able to claim the Employer Allowances.

National Insurance Boundaries

If your business’s Class 1 National Insurance liabilities in the previous tax year exceeded £100,000, you would not be able to claim EA. The creators explicitly designed this scheme to help SMBs who often find paying NI contributions challenging.

Director Constraints

If your business has a single director who is also the company’s sole employee, they will exclude you from the Employer Allowances allowance. Such a business won’t have to deal with numerous contributions at the end of each tax year.

Are you thinking of providing company cars?

If you’re a business owner, you are responsible for providing incentives and rewards to your employees. In recent years, company cars have become a standard in many corporate sectors. But, what impact does this have on tax? Unless a vehicle has zero emissions, the capital allowance for second-hand and new cars remains the same.

What is the company car allowance? This is set at either 18% or 6%, depending on if the CO2 emissions are above or below 50g CO2 per km. Please note, if a zero-emission car becomes in possession by a business, the unique 100% first-year allowance is only eligible for new vehicles. However, there is an exception for ex-demonstrator cars.

Expert Advice from Thomas Nock

Are you looking for financial advisors in Birmingham, UK, to offer your business further guidance on tax relief schemes? Let us help you. With roots dating back to 1905, we have collected a wealth of knowledge and experience in accountancy and taxation. As now experts in our field, we can offer you the best advice that’s always in favour of you and your business.

Contact us today on 01384 261300 if you’d like to discuss your situation further.

If you found this blog useful, you may wish to read a previous one: Changes To VAT Rates: What Does This Mean?

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