Payroll Services and Employment Allowance

Is Your Company Claiming Employment Allowance?

If you are an employer then you could claim up to £3,000 a year off your National Insurance bill if you’re an employer. But did you know about it? And even if you did, are you claiming it? It makes sense to take advantage of it. Here at J L P Payroll Services. We can help.

What is the Employment Allowance and How Does it Work?

The Employment Allowance scheme was introduced to encourage small firms to take on more employees and thereby encourage wider economic growth

The scheme allows an eligible company to write off the first £3,000 of its overall Employers’ NIC bill each year, as from 6th April 2016. Originally the limit was £2,000.

The Employment Allowance is ‘claimed’ each month through a firm’s payroll process, as the liability arises. What this means is that no NIC is payable until acompany’s entire £3,000 allowance has been used up.

The Government stated that it expects 450,000 small firms to benefit from the scheme, with around one-third of them paying no Employers’ NICs at all as a result. Our experience is that many companies are not aware of the Employment Allowance and are missing out on it.

So Who is Eligible?

  • You can only claim the Allowance if you pay Class 1 Employers’ National Insurance Contributions – as limited companies do.
  • The self-employed are ineligible, as they pay Class 2 and Class 4 Contributions
  • You cannot claim if you provide services to a public sector body.
  • If you are caught by IR35, the Allowance cannot be claimed against deemed payments
  • Significantly, from April 2016, sole director companies with no additional employees will not be able to claim.

How to Claim? We Can Help

HMRC’S advice, on their website has this advice:

To claim through your payroll software put ‘Yes’ in the ‘Employment Allowance indicator’ field next time you send an Employment Payment Summary (EPS) to HM Revenue and Customs (HMRC).

If you use HMRC’s Basic PAYE Tools:

  1. Select the correct name in the ‘Employer’ menu on the home page.
  2. Select ‘Change employer details’.
  3. Select ‘Yes’ in the ‘Employment Allowance indicator’ field.
  4. Send your EPS as normal.

As outsourced payroll service providers, we can help confirm your eligibility and make your claim. You only need to claim Employment Allowance once and you can make your claim at any time in the year. Your claim will continue until you stop it.

If you feel you would rather we made the claim for you, and as payroll specialists, we do this for all of our clients, then simply call us on 0121 422 0550 or contact us, and we’ll be happy to help.

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