Employment Allowance


Most employers can now claim up to a £2,000 reduction off their employers Class 1 national insurance contributions (NIC) under rules which came into force on 6 April 2014.


How does it work?


The claim is made as a reduction each and every month from April and is shown on the Employers

Payment Summary (EPS).The employer’s national insurance can be reduced from April 2014 by £2,000 if the whole allowance cannot be used in April the reducing balance is carried forward month by month.


The employer’s national insurance can be reduced by £2,000 each and every year. No unused balance can be carried forward to a new tax year.


As an employer, if you usually pay less than £2,000 a year, then you won’t have to pay any employer  National Insurance contributions at all.


Who is eligible?


Nearly all employers that pay Class 1 National Insurance contributions on their employees’ and directors’ earnings are eligible. This includes businesses, charities and community amateur sports clubs.


If a company belongs to a group of companies or a charity is part of a charity structure, only one company or charity can claim the allowance. You can only claim the £2,000 Employment Allowance against one PAYE scheme even if your business runs multiple schemes.


If a company has control of another company, or both companies are under the control of the same person or persons these are connected companies. If the same person or connected persons control two or more charities and the charities share the same (or substantially similar) purpose and activities, or both charities belong to a group of charities they are connected and will only qualify for one Employment Allowance.


For more information please contact Margaret Merrifield, Payroll Services Manager on 01524 388719 or e-mail pay@mooreandsmalley.co.uk