Employers to benefit from National Insurance reliefFeb. 28, 2014, 12:10pm
Calling all employers… Did you realise that from April 6th 2014 you could be entitlement up to a £2,000 allowance per year to be offset against your employer Class 1 National Insurance Contribution (NIC) liability?
According to the Chancellor, George Osborne, the new allowance is aimed at supporting small enterprises to grow. It is estimated that up to 450,000 of the country’s smallest businesses will no longer have to pay any NICs and in total, approximately 2.5 million businesses and charities will be eligible for the entitlement.
The Government’s new legislation means an employer can hire a member of staff on a salary of up to £22,400 or four employees on minimum wage without paying any employer NICs.
Are you eligible to claim? Any business or charity is eligible to take advantage of the allowance, with the exception of employers who employ a person/s who are engaged for purposes connected with the employer’s personal, family of household affairs. This could include nannies, gardeners, care workers, etc.
Restrictions also apply to connected companies, for instance enterprises that work interchangeably or where one controls the other. In this instance, the maximum allowance between connected companies is £2,000 in total and it can only be applied to one PAYE scheme.
How much will you be entitled to? Although the maximum is £2,000 your personal employer allowance will be determined by your NIC liability; therefore if your liability is £800 per year, you will receive an £800 allowance.
How can you start claiming? From April 6th when the allowance comes into effect employers need to notify HMRC of the PAYE scheme which the deductions will be made. This can be done through payroll software, which supports the Employer Payment Summary (EPS), and must be completed prior to making a deduction.
Deductions must be made throughout the year on only qualifying payments as they occur and will be reduced over the period until the maximum £2,000 limit has been reached.
For further advice about the new employer allowance and to see if you could be eligible contact Tindles on 01642 878555 or visit www.tindles.co.uk.