Employment allowance starts on 6 April

Employers can reduce their national insurance contributions (NICs) from 6 April by claiming a new employment allowance.

The allowance of up to £2000 per year can be claimed by a business or charity, including community amateur sports clubs, that pay employer Class 1 NICs on employees’ or directors’ earnings.

It’s only possible to claim the £2,000 employment allowance against one PAYE scheme, even if a business runs multiple schemes.

The allowance can be claimed through payroll software or HMRC's PAYE software.

Claimants must reduce their employer Class 1 NICs payment by an amount of employment allowance equal to employer Class 1 NICs due, but not more than £2,000 per year.

Therefore, if employer Class 1 NICs are £1,200 each month, in April the employment allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.

After the allowance is claimed, HMRC carries the claim forward each tax year. At the beginning of each year businesses should check that their circumstances haven’t changed.

The government said that over 90% of the benefit of the employment allowance will go to...

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Comments

Employment allowance

lordburnside | | Permalink

This isn't as straight forward as one might think.

A nurse working in a limited company for NHS isn't eligible. Similarly NHS dentists, Community interest companies providing care for autistic children do not qualify but childminders do.

Its how the care is given. You can read hmrc info but its not perfect.

Why does life have to be so complicated?

The problem will be where your client has claimed only to find he should not have. Best to check but the guy answering the questions at HMRC was obviously fed up with it all and quite unhelpful.

 

RTI EMPLOYMENT ALLOWANCE SUBMISSION WON'T GO

spurs1952 | | Permalink

Dear All,

I had finished off the 13/14 PAYE ok and ran off P60s - all fine there. I then downloaded the new Basic Tools etc allowing me to do pay of 14/15 etc. , and claimed this new wonderful £2000 allowance by clicking the relevant button which then led me into the requirement to send the online submission notifying HMRC.  It wouldn't go despite all efforts, and I've a failed submission already to my name !!!!!

HMRC were useless as ever in helping but I've a Case number if that helps!.  I have input on an IMac.  Has anyone else had this problem please, and has anyone solved it?  HELP!!!!!!!

Susan Frank's picture

RTI Employment allowance submission

Susan Frank | | Permalink

Hi 

I had  one this morning - but i'd input the wrong submission details on my (new) clients e-submission settings - my fault entirely - apart from that i've had no problems at all with the rest I  do use Sage payroll software and not the HMRC tools.

Employers £2000 NI Allowance

ericwatson | | Permalink

Hi, I note that the £2000 NI Allowance is available to employers with less than 50 employees. Is there a minimum limit in force or are sole director companies with only one employee (the director) also eligible?

Excluded Employers

jillpalmer | | Permalink

HMRC's guidance has changed for one of the excluded employer categories from 'IN' the public sector to 'IN' or 'FOR' the public sector.

I have a payroll client who act as consultants to NHS and other government departments. Also, one who has contract for kennels for Metropolitan Police dogs. A decorator who works mainly at a school (I will need to check the status of the school). I am sure there are others who I may not be aware of exact nature of their services.

This is not straightforward at all!

Mac Problem Update

spurs1952 | | Permalink

spurs1952 wrote:

Dear All,

I had finished off the 13/14 PAYE ok and ran off P60s - all fine there. I then downloaded the new Basic Tools etc allowing me to do pay of 14/15 etc. , and claimed this new wonderful £2000 allowance by clicking the relevant button which then led me into the requirement to send the online submission notifying HMRC.  It wouldn't go despite all efforts, and I've a failed submission already to my name !!!!!

HMRC were useless as ever in helping but I've a Case number if that helps!.  I have input on an IMac.  Has anyone else had this problem please, and has anyone solved it?  HELP!!!!!!!

 

Update - All sorted now. Nice helpful HMRC friendly lady rang....... The fix involves deleting completely old Basic Tools (which I had updated for 14/15) to Trash, uploading new 14/15 Basic Tools from HMRC website (obviously for Mac in my case) - it takes a bit of time, and resending submission on new 14/15 Basic Paye Tools.  Job done!!!!!!!!

Phew isn't the word for my relief, so due credit to HMRC for acting quickly and at least sorting it. 

Jennifer Denning's picture

on the subject of the employment allowance

Jennifer Denning | | Permalink

Could this be claimed in two companies where both are owned under common control?  They both qualify on other grounds...

Thanks!

John Stokdyk's picture

@Jennifer - I suspect not    1 thanks

John Stokdyk | | Permalink

I followed the links through to HMRC's detailed guidance on this subject, which states: 

If a company has control of another company, or both companies are under the control of the same person or persons for example, companies linked in a group, these companies are connected... 

Where this is the case, you will only be entitled to one Employment Allowance to use against one PAYE scheme (regardless of how many PAYEschemes you operate). It is up to you to nominate which PAYE scheme to claim the allowance against.

Employment Allowance

Hilary1748 | | Permalink

Hi there, my query is when posting the Salary Journals on Sage 50 you presumably post the full amount of NI Combined, but when making a payment you deduct the amount of Company NI, how to you account for the difference out of the bank? sorry if I am being thick  - it is Friday after all.

Susan Frank's picture

Hi HIlary

Susan Frank | | Permalink

Hi HIlary

I journal the employment allowance out (DR )of Employer Ni - the opposite entry being (CR)  Total Ni - thus making the bank for total NI paid correct.  My entries show employer allowance' on the journals i.e

                  CR              DR

Gross pay  3000

emr NI        150

Net Pay                    2050

PAYE                        600

Total Ni                      500

Empr ni                      150

Total ni    150

Hope that helps.

Employment Allowance

Hilary1748 | | Permalink

Hi Susan

 

Yes that's really useful thank you very much.