Employment Allowance – Are You Claiming Your Entitlement?

HMRC Are currently running a scheme which allows employers to reduce their National Insurance bill by up to £2,000.

The allowance reduces your Employers Class 1 National Insurance, over the course of the 2015/16 tax year, until either your £2,000 allowance is used, or the tax year ends (whichever occurs first).

Eligible employers are those businesses or charities paying employers class 1 national insurance, with the exception of:

• Organisations or businesses who employ someone for personal, household or domestic work, eg: nanny, cleaner.
• Public bodies or businesses who carry out more than half their work in the public sector,   eg: NHS Hospitals, Local Councils.
• Service Companies with payments of employment income which fall under IR35 rules.

Group Companies can only claim the Employment Allowance for one company or charity within their group.

The majority of payroll software is set up to accommodate this allowance, including Sage and HMRC’s own Basic PAYE Tool.  Once the appropriate box has been “checked” within your software, the value of the allowance being claimed is submitted to HMRC, each time you run your payroll and send HMRC an Employment Payment Summary (EPS).

You can start using the Employment Allowance at any time during the Tax Year, but if you need to back date it, you will need to speak to HMRC to either apply any unclaimed allowance at the end of the tax year, or claim a refund from HMRC.

If you want any general advice or assistance in implementing this scheme within your own payroll systems please contact me becky.campbell@campbellturner.co.uk

Becky Campbell