From 6 April 2014 employers can claim the Employment Allowance and reduce your employer Class 1 National Insurance contributions (NICs).
Eligible employers can reduce their employer Class 1 NICs by up to £2,000 each tax year.
| 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. If your company belongs to a group of companies or your charity is part of a charities structure, only one company or charity can claim the allowance. It is up to you to decide which company or charity will claim the allowance. You can only claim the £2,000 Employment Allowance against one PAYE scheme – even if your business runs multiple schemes.
Not all businesses can claim the Employment Allowance, call us now to see if you are eligible. |
How to claim your Employment Allowance
You can use your own payroll software (see your software provider’s instructions), HM Revenue and Customs’ Basic PAYE Tools or contact us to help you claim the Employment Allowance.
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.
For example, if your employer Class 1 NICs are £1,200 each month, in April your Employment Allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.
Once made, HMRC will automatically carry your claim forward each tax year. So at the beginning of each year you should check your circumstances haven’t changed.
Note: The Employment Allowance is subject to Parliamentary approval.
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