Claiming employers allowance in year

When claiming EA "in year" is it only utilised against the employers NI due in the following months?

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Hi, SME client has taken on new employees so is now entiteld to claim the EA. Have submitted the EPS (month 8) which has been accepted. The payroll software has deducted the employers NI for the month and left the PAYE and Employees NI due as payable on the P30.

However according to HMRC's guidance,  it says that a claim during the year is only effective against future months employers NI.....  and yes I know HMRC's guidance is not always correct, which is why I am seeking some help on here.

Who's correct, the software or HMRC's website.

Many thanks

Replies (16)

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By Payrollgal
27th Nov 2019 11:28

I am unsure of your question. Are you asking if it can be claimed for M8 or for backdated for prior months?

I am going to assume the former. As you say, you have submitted an EPS for M8 claiming EA - this can be used against the M8 liability. Your software is correct.

Thanks (1)
Replying to Payrollgal:
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By hazy..
27th Nov 2019 12:05

hi,
Thanks for your reply- want to use the EA against M8 to M12 employers NI, ie. current and future months

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Replying to hazy..:
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By Payrollgal
27th Nov 2019 12:31

Yep, you can use it. The whole lot if the bills are big enough!

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By JDBENJAMIN
27th Nov 2019 11:31

This is the sort of question that can only be answered by looking at the actual legislation. HMRC guidance and payroll software are both sometimes wrong on detail such as this. Personally, I would go with however the software treats it, as it will almost certainly not be challenged.

Thanks (2)
RedFive
By RedFive
27th Nov 2019 12:12

Are you asking whether the Allowance is then prorated from then on, e.g. so you only get 5/12’s? If so, it’s not. You now get full £3k.

Are you asking whether Employers NI paid previous to month 8 while presumably not being qualified for EA can now be offset? If so, then no you can’t it’s for qualification point onwards.

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By SXGuy
27th Nov 2019 12:20

Straight answer. Employment allowance starts from the month you make the claim. So from M8 onwards.

If there is any allowance unused at the end of the year you can use it against previous months I believe but Im 99% sure you have to write to them for this to be done and refunded.

Edit; sorry I missed the bit about not meeting the requirements to claim it prior to M8. In your case no it can't be carried back. But in other cases where the requirement was met ft M1 it can.

Thanks (2)
Replying to SXGuy:
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By Payrollgal
27th Nov 2019 12:31

Unused allowance can also be offset against CT. But yes, you do need to write in and wait an age.

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Replying to Payrollgal:
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By hazy..
27th Nov 2019 14:13

I have to admit I had not heard it can be used against CT. Am I understanding you correctly and where employers NI has been less than the £3k allowance any unsed balance is claimable against a CT liability?

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Replying to hazy..:
RedFive
By RedFive
27th Nov 2019 14:39

I’m smelling BS here or maybe a misunderstanding of the rules.

Would love to be proved wrong though. (I won’t be).

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Replying to Payrollgal:
By djn24
02nd Dec 2019 10:44

Payrollgal wrote:

Unused allowance can also be offset against CT. But yes, you do need to write in and wait an age.


? That's not right.
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Replying to Payrollgal:
7om
By Tom 7000
02nd Dec 2019 14:56

Are you sure?.......

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Replying to Payrollgal:
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By JDBENJAMIN
03rd Dec 2019 12:39

Payrollgal, you are confusing EA with CIS deductions on income. The latter can be offset against CT liability if there is not enough PAYE liability to offset them against. EA can't be offset against anything except employer's NI liability.

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By Matrix
27th Nov 2019 14:44

I am sure I once claimed it late for a client and there was an in-year repayment. I would reduce future PAYE by the remaining ER and see what HMRC are showing online. You can always call up if you disagree.

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By kestrepo
28th Nov 2019 11:14

I take the stance that you can claim for the whole allowance - as long as you have enough NI to cover it!

It is available to qualifying employers on a per tax year basis.

I have pasted an extract from the the National Insurance Contributions Act 2014, CHAPTER 7 below where is states that it is for a tax year:

"1 Employment allowance for national insurance contributions
(1) A person qualifies for an employment allowance for a tax year if, in the tax
year—
(a) the person is the secondary contributor in relation to payments of
earnings to, or for the benefit of, one or more employed earners, and
(b) in consequence, the person incurs liabilities to pay secondary Class 1
contributions under SSCBA 1992 or SSCB(NI)A 1992 (or both)"

http://www.legislation.gov.uk/ukpga/2014/7/pdfs/ukpga_20140007_en.pdf

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Replying to kestrepo:
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By hazy..
28th Nov 2019 12:08

Many thanks for your response, it helps to reassure me of my initial thoughts on the matter, so your input is much appreciated :-)

Thanks also to everyone else who responded, I think this is a fabulous resource when sometimes you just need someone else's input.

Thanks (3)
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By psimonparsons
02nd Dec 2019 13:54

Employment allowance applies to the full tax year. It is offset against secondary NICs for employees (not deemed employees under IR35 currently applied in the public sector).

It cannot be claimed for a part tax year, either the employer group is entitled or not for the full year. The indicator can be set at any time or cancelled at any time. Either way the setting applies to that full year (not a part year).

As indicated by some others, it can only be offset against a liability that is due under the payroll PAYE calculation.

These days payments of PAYE are not split between tax and NICs but as a single payment.

Some two aspects:
- is there sufficient secondary NICs to offset the whole £3,000 or just a lower value
- is there a sufficient payment due to cover the amount being offset

Thanks (1)