Feb 202014
 

Employment Allowance 2014

The finance bill for 2014 includes a National Insurance Contributions Bill 2014. The bill has introduced Employment Allowance that can be claimed by eligible employers from 6 April 2014. If eligible, an employer can reduce Class 1 NICs by up to £2,000 each tax year. The Employment Allowance can be claimed by a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on the employees’ or directors’ earnings.The following excluded employers won’t be able the claim it though i.e.:

Those who:

  • employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
  • already claim the allowance through a connected company or charity
  • are a public authority, this includes; local, district, town and parish councils

and those who carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:

  • NHS services
  • General Practitioner services
  • the managing of housing stock owned by or for a local council
  • providing a meals on wheels service for a local council
  • refuse collection for a local council
  • prison services

collecting debt for a government department

Claiming the employment allowance

The allowance is straightforward to claim as part of the normal payroll process through Real Time Information (RTI) within the software package or using the Basic PAYE Tools available from the HMRC website. In terms of the actual process of claiming it software, an Employment Payment Summary (EPS) submission specifically to claim the employment allowance will be required. Alternatively, the Employment Allowance can be claimed through the 2014-15 version of the Basic PAYE Tools. Employers exempt from filing online can claim the Employment Allowance by using the paper EPS from April 2014. Effectively, the Employment Allowance will be offset against payments of employer Class 1 NICs when they are due to be paid, until the full £2,000 Employment Allowance is used up or the tax year ends, whichever is soonest.

 

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