The Employment Allowance was introduced in April 2014 to encourage employers to take on more staff. It stands at £3,000 per year and works by claiming against your Employer’s National Insurance Contributions. But did you know that as an employer you can claim it? Had you even heard of it?
How Does the Employment Allowance Work?
The Allowance is claimed through your payroll at the beginning of each new payroll year by submitting an EPS showing your claim. However, if you forget to claim it you can claim part way through the year and can also apply to HMRC for a backdated Employment Allowance if you have forgotten to claim in previous years.
The Employment Allowance can only be claimed against Employers Class 1 National Insurance up to the value of £3,000. If your Employers NI contributions do not reach £3,000 in one year you cannot claim the difference. If your Employers NI amounts to more than £3,000 in the first month you will use the whole of the Allowance in that month.
What are the Rules for Claiming?
Employment Allowance cannot be claimed:
- If the director is the sole employee.
- If the business is a public body or does more than 50% of its work in the public sector (unless it is a charity).
- If the employee does personal, household or domestic work or is a gardener
- By a service company working under IR35
- By more than one company if the company is part of a Group or if the companies are connected in any way.
How Can We Help?
As outsourced payroll providers, we often come across companies who are entitled to claim, but hadn’t, usually because they didn’t know about it or thought the whole process was likely to be too complex.
The good news is that if you outsource your payroll to us, we will quickly find out if you are entitled and make the claim if you are. Contact us or call us on 0121 422 0550 for an initial discussion on how we can help.