From 6th April 2014 most employers will be entitled to claim up to £2,000 against their National Insurance contributions. Chloe Hughes of Nottingham and Long Eaton chartered accountants Clayton & Brewill explains more.
Known as the Employment Allowance, this latest initiative from HMRC is aimed firmly at small businesses, with 90 percent of the benefit expected to go to businesses that employ fewer than 50 people.
It was first unveiled by chancellor George Osborne in the 2013 Budget and is intended to act as an incentive to small businesses to recruit and retain staff.
Only businesses that employ and pay staff will be entitled to the Employment Allowance. Also excluded are organisations that operate mainly in the public sector, for example catering services for a local council, or an NHS dental practice, and employers of domestic staff such as nannies, gardeners and cleaners.
Eligible businesses can offset up to a maximum £2,000 of their Class 1 National Insurance (NI) contributions as Chloe Hughes explains:
“The allowance is roughly equivalent to the NI on a salary of £23,000. If a business pays HMRC less than £2,000 a year in NI contributions their bill will be eliminated completely, which represents a significant saving.
“The government estimates that almost half a million small firms will have their Class 1 National Insurance contributions eliminated completely through the Employment Allowance.
“Claims can be made from 6th April and for Clayton & Brewill payroll clients we will be working with HMRC to ensure that businesses can benefit from the reduced NI liability from the outset. Businesses can also process their own claims through HMRC's PAYE Direct scheme.”
For more information on the Employment Allowance and how to claim for it, please contact Chloe Hughes by email or on 0115 950 3044.