On 6 April 2014 the Employment Allowance came into effect – a new relief which means nearly all employers can save up to £2,000 of employer’s National Insurance contributions (NICs) each year.
The Chancellor of the Exchequer, George Osborne, wrote a letter to small businesses, to make sure they knew about the allowance and how to claim it but many businesses have ignored the letter as junk mail and are failing to make the claim.
First, some brief details about the Employment Allowance. It can be claimed by any business or charity (including community amateur sports clubs) that pays NICs on employees’ or directors’ earnings.
The allowance is set against the employer’s entire Class 1 NIC liability each week or month from 6 April 2014 until the maximum £2,000 entitlement is used up, so if you usually pay less than £2,000 a year in total, you won’t have to pay any employer National Insurance contributions. It cannot be set against Class 1A or Class 1B employer NIC.
Employers can use their own payroll software or HMRC’s Basic PAYE Tools to claim. For most payroll packages, this only entails the ticking of a box on the payroll software.
There are no regional restrictions though there are some excluded employers, and also special rules for groups of companies or charities and for employers running more than one PAYE scheme.
For any further information, contact our Payroll Team at your local Burgis & Bullock office on 0845 177 5500 or contact us on-line.