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 Accounting News & Insights

New Employment Allowance

16th April 2014

Employers can reduce their national insurance contributions (NICs) from 6 April by claiming a new employment allowance

The allowance of up to £2000 per year can be claimed by a business or charity, including community amateur sports clubs, that pay employer Class 1 NICs on employees’ or directors’ earnings. New guidance on the Gov.uk website explains the allowance in more detail, and how businesses can claim it.

It’s only possible to claim the £2,000 employment allowance against one PAYE scheme, even if a business runs multiple schemes.

The allowance can be claimed through payroll software or HMRC's PAYE software, and by ticking a box on the employer's payment submission under RTI to show that you have submitted a reduced payment equal to the amount claimed in that period.

Claimants must reduce their employer Class 1 NICs payment by an amount of employment allowance equal to employer Class 1 NICs due, but not more than £2,000 per year.

Therefore, if employer Class 1 NICs are £1,200 each month, in April the employment allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.

The government said that over 90% of the benefit of the employment allowance will go to small businesses with fewer than 50 employees. 

Businesses will be able to employ four adults or ten 18-20 year-olds full-time on the national minimum wage without paying any employer NICs.

Source: AccountingWeb

You need to be aware there are certain rules around eligibility.  Please contact our Payroll Manager Jane Watford if you have any queries: jane.watford@wardwilliams.co.uk


Accounting News & Insights

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