New Employment Allowance to come into effect from 6 April 2014

The Employment Allowance will give eligible employers a reduction of up to £2,000 in their employer Class 1 NIC’s liability each year.

This is available where they have employees or directors liable to employer Class 1 NIC’s on their earnings.

How does the NIC’s Employment Allowance work?

The Employment Allowance will be straightforward to claim. It is done as part of the normal payroll process through Real Time Information submissions.

The Employment Allowance will be offset against payments of employer Class 1 NIC’s when they are due to be paid, until the full £2,000 Employment Allowance is used up or the tax year ends, whichever is soonest.

This means you could obtain the full allowance early in the year if your liabilities are great enough, or otherwise on a monthly basis across the year.

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.

Does every business qualify ?

The only businesses that are excluded from this allowance are

    • 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
    • employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker.

Should you feel you need more guidance or a further understanding of this please do not hesitate to contact  Daniel Kidd (dk@obcaccountants.com) or alternatively you can look up the information at  www.gov.uk/employment-allowance-up-to-2000-off-your-class-1-nics

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