Employment Allowance

From 6th April 2014 most businesses will be entitled to an annual ‘employment allowance’ of up to £2000 to reduce their liability for employer’s Class 1 Employer National Insurance Contributions (NICs).

HMRC have said this measure will have a positive impact on businesses by benefitting up to 1.25 million employers and around 450,000 small employers who will no longer pay employer’s NICs in 2014/15.

We have updated our processes to encompass this new allowance and clients will notice a new row on the payroll summary of the reports, reducing the overall liabilty to employers NIC.

To keep the process as simple as possible for employers, the employment allowance will be delivered through RTI. HMRC have added a facility to the RTI Employer Payment Summary (EPS) referring to the employment allowance in the form of a ‘yes/no’ indicator. To claim the allowance, the employer will have to signify their intention to claim by completing the indicator just once. PSC can do this on your behalf.

The employment allowance will apply per employer, regardless of how many PAYE schemes an employer has in operation. Therefore, each employer can only claim for one allowance. Moreover, there are certain organisations (mainly those in the public sector or supplying services to public sector organisations) that cannot claim. More information can be found at: https://www.gov.uk/employment-allowance-up-to-2000-off-your-class-1-nics