Bookkeeping, Business Services, Business Tax, HMRC, Personal tax, Tax Relief

How can my company reduce National Insurance costs?

By Lesley Stalker

If you are able to utilise the New Employment Allowance, it will mean your Class 1 NIC costs are reduced by £2000.

A new Employment Allowance is available to eligible employers from 6th 2014, enabling them to reduce their employers’ Class 1 NICs by up to £2,000 each tax year. Read on to find out whether you could benefit.

Who can claim the Employment Allowance?
Any business or charity that currently pays Class 1 NICs on its employees’ or directors’ earnings. For companies and charities that form part of a larger group, only one of the entities within the group structure can claim the allowance but they are able to decide which one. Additionally, it should be noted that the allowance can only be claimed against a single PAYE scheme, even where a business runs multiple schemes.

How can you claim the Employment Allowance?

Claims can be made using your company’s own payroll software or through HMRC’s own PAYE Tools. The payments should be calculated in declining amounts. For instance, if your employers’ Class 1 NICs are £1,200 each month, in April your Employment Allowance used will be £1,200 and in May £800, as the maximum is capped at £2,000.

You will be able to see how much of the Employment Allowance you have used by viewing your liabilities and payments in HMRC’s Online Service.

Once you have made the claim, HMRC will automatically carry your claim forward each year, so at the beginning of each year you should check your circumstances haven’t changed.

Who is excluded from claiming the Employment Allowance?

Certain employers are excluded from the allowance, for example those who employ someone for personal, household or domestic work, such as a nanny, care worker, au pair or gardener. Others who are excluded from claiming include public authorities including local councils, and those who carry out functions of a public nature (unless they have charitable status) such as GPs, NHS workers, housing associations or local government service providers.

Find out more about the new Employment Allowance

There are other considerations to be aware of before going ahead to make the claim. For more information please contact Lesley Stalker by emailing las@rjp.co.uk.

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