Employment Allowance has been increased recently, allowing employers a reduction of up to £3,000 a year from their National Insurance contributions.
Introduced in April 2014 the allowance is aimed at supporting businesses and charities by cutting the cost of employment.
Employers can only claim against Class 1 National Insurance up to a maximum of £3,000 each tax year. They can still claim the allowance if they’ve paid less than £3,000 a year.
The allowance will reduce employer’s (secondary) Class 1 each time they run a payroll until the £3,000 has gone or the tax year ends.
Those who can claim Employment Allowance include a business or charity (including a community amateur sports club) paying employers Class 1 National Insurance. Employers can also claim if they employ a care or support worker.
If businesses have more than one employer PAYE reference, they can only claim Employment Allowance against one of them.
Employers Allowance can be claimed at any time in the tax year. Those that are ineligible to claim include:
- The director and the only paid employee in the company.
- Personal, household or domestic workers (eg a nanny or gardener) – unless they are a care or support worker.
- Public bodies or businesses doing more than half of their work in the public sector (i.e. local councils and NHS services) – unless they are a charity.
- Service companies working under ‘IR35 rules’ whose only income is the earnings of the intermediary (i.e. personal service company, limited company or partnership).
Employers can claim through their HRMC payroll software, by putting ‘Yes’ in the ‘Employment Allowance indicator’ field next time they send an Employment Payment Summary.
To find out more about how to claim Employment Allowance contact the Williams Denton team on Bangor 01248 670370 or Llandudno 01492 877478.
williamsdenton 