Employment Allowance – have you been claiming it?

HM Revenue & Customs introduced the Employment Allowance in April 2014. If you haven’t heard of the Employment Allowance, it is a £2,000 (£3,000 since April 2016) saving against Employer’s National Insurance Contributions for small businesses and charities. For many small businesses, this means no NICs bill at all.

However, from experience, some small businesses who prepare their payroll themselves, or through the use of an internal bookkeeper, haven’t been claiming the Employment Allowance since it was introduced. In most cases this is due to not ticking the appropriate box in their payroll software and going through the simple eligibility procedure. Once done, the software automatically makes the deduction from the monthly NIC payment for you. HMRC won’t have told you if you haven’t been claiming it. So, have you been claiming it?

If you haven’t, you could be owed up to £7,000 in overpaid National Insurance Contributions. Don’t worry though, you can make a claim for it up to four years after the end of the tax year. The claim will usually be in the form of an offset against current or future PAYE liabilities.

Please be aware that there are various eligibility criteria which HMRC applies to the Employment Allowance and some of these changed from April 2016.

If you would like to discuss this further, please do not hesitate to contact us.