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...
About Nick Huber
I’m a specialist business journalist and have a particular interest in tax and technology.