In this year’s Summer Budget, Chancellor Osborne announced that the Employment Allowance would be increasing to £3,000 from April 2016, allowing employers to reduce their Class 1 National Insurance Contributions by up to £1,000 more than previously.
Most employers who pay Class 1 NIC are eligible for the allowance and the savings are extended to charities, amateur sports clubs and the employment of a carer or support worker too.
Businesses not eligible for the Employment Allowance include those where a director of a company is also the only employee. In addition, if the employer is part of a group, only one company in that group can claim the allowance.
Advises Julia Whelan, Tax Partner at Curo Chartered Accountants “This is a welcome boost for employers but in order for them to receive the reduction against NI, they must claim it through their payroll software; if payroll is outsourced, make sure that those responsible for processing have claimed the maximum allowance”.
Continues Julia “The good news is that HMRC will carry the allowance forward for each subsequent tax year until it is told it no longer applies; therefore, employers must check that circumstances haven’t changed at the beginning of each tax year in order to qualify for the allowance”.
Curo Chartered Accountants has a payroll department advising on all manner of queries relating to employee and employer taxation. Please contact [email protected] or call 01527 558539 if you would like to find out more about our services..