Employment Allowance

What is the Employment Allowance?

1st March 2014

The Employment Allowance is available from 6 April 2014. If you are eligible, you can reduce your employer Class 1 NICs by up to £2,000 each tax year.

Who may be eligible for the Employment Allowance?

You can claim the Employment Allowance if you are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees’ or directors’ earnings.

There are some exclusions to be aware of though, such as if your company has connected companies or charities that are already claiming the Allowance, you are a public authority or you have a public nature (unless you are a registered charity). There are also some quirks with regards to service companies to note too.

How you make your claim

You can use your own payroll software or HM Revenue & Customs’ Basic PAYE Tools (whichever you use), to claim the Employment Allowance. If your accountant or payroll bureau prepares your payroll for you, they should take care of claiming the Allowance, but it’s worth double-checking with them.

When you make your claim, you must reduce your employer Class 1 NICs payment by an amount of Employment Allowance equal to your employer Class 1 NICs due, but not more than £2,000 per year.

Please feel free to contact us if you would like to find out more about the Allowance and what TaxAssist Accountants can do to help with your payroll affairs.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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