Employment allowance rises to £5,000

The maximum employment allowance will increase from £4 000 to £5 000 from 6 April 2022 the chancellor announced in the spring statement. This means eligible businesses charities and community amateur sports clubs will be able to claim a greater reduction on their secondary class 1 National Insurance and from 2023-24 their health and social care levy liabilities (secondary class 1 element).

The Treasury expects some 495 000 businesses will benefit from this increase including around 50 000 businesses which will be taken out of paying National Insurance and the health and social care levy. This is in addition to the 620 000 businesses who already do not pay National Insurance due to the current level of the employment allowance.

David Hedges partner and head of employment taxes at Azets called this ‘a helpful easement for small employers which goes some way to...