NICs Employment Allowances
From 6 April 2014 employers can claim the Employment Allowance and reduce their employer Class 1 National Insurance contributions (NICs).
Key facts – who can claim
The Employment Allowance is available from 6 April 2014. If you are eligible you can reduce your employer Class 1 NICs by up to £3,000 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 £3,000 Employment Allowance against one PAYE scheme – even if your business runs multiple schemes.
Not all businesses can claim the Employment Allowance, see “excluded employers” for more information.
If you are exempt from filing, or unable to file online, you can claim the Employment Allowance, at the beginning of the tax year, using the paper Employer Payment Summary (EPS).
You cannot claim the Employment Allowance, for example if you:
- employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener,
- already claim the allowance through a connected company or charity
- are a Director and only employee of the company.
- are a public authority, this includes; local, district, town and parish councils
- carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
- NHS services
- General Practitioner services
- the managing of housing stock owned by or for a local council
- providing a meals on wheels service for a local council
- refuse collection for a local council
- prison services
- collecting debt for a government department
You do not carry out a function of a public nature, if you are:
- providing security and cleaning services for a public building, such as government or local council offices
- supplying IT services for a government department or local council
Personal and Managed Service Companies who pay contract fees instead of a wage or salary, may not be able to claim the Employment Allowance, as you cannot claim the allowance for any deemed payments of employment income.
Service companies can only claim the allowance, if you pay earnings and have an employer Class 1 NICs liability on these earnings.
If you have any questions about NIC’S employment allowances feel free to get in touch with us. We’re always happy to help.