ICB has mentioned the interaction between the Employment Allowance and State Aid on Wages Wednesdays and wants to clarify the position in writing given HMRC have updated their RTI Data Items Guide for 2025/26.
In previous tax years, to make a claim for the Employment Allowance via the Employer Payment Summary (EPS), it was necessary for the employer to indicate whether they were in one of the following sectors:
- Agriculture;
- Fisheries and aquaculture;
- Road transport; or
- Industrial / other
Further, as the Employment Allowance counted as De Minimis State Aid (financial support from the UK Government), it was necessary for employers to declare that the maximum allowance had not been exceeded in the previous three years.
As ICB have detailed, the National Insurance Contributions (Secondary Class 1 Contributions) Bill removes the State Aid restrictions meaning this is not relevant in 2025/26. However, the RTI specifications for software developers still retain the above sectors as valid RTI data fields.
Although HMRC have advised developers that State Aid business sectors are irrelevant for tax year 2025/26, on 10 January 2025 they issued a revised Data Item Guide that makes this more specific. For each of the above RTI fields, HMRC’s version 1.1a says ‘Selection of this field not required in tax year 2025-26’.
For Bookkeepers
Whilst HMRC say that completion of the fields is not required, this does not mean that the fields cannot be completed as the data items remain valid in HMRC’s systems. ICB advises the following regarding Employment Allowance claims in 2025/26:
- The ONLY things that have changed regarding eligibility is anything to do with State Aid and the £100,000 criteria. An employer may still remain ineligible because, for example, they are a connected employer
- Therefore, there is no need to ask clients for their business sector in any year-start communication you may have with them
If eligible, there are only two software requirements on the EPS to claim the Allowance:
1. Populate the ‘Employment Allowance indicator’ as ‘Yes’
2. Select the option ‘State aid rules do not apply to Employer’
