HMRC guidance on Employment Allowance

HMRC has published detailed guidance on the Employment Allowance available from 6 April 2014 which allows eligible companies to reduce employer Class 1 National Insurance Contributions (NICs) by up to £2,000 each tax year.

The allowance, first announced in Budget 2013, can be claimed by a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on employees' or directors' earnings.

If the company belongs to a group of companies or the charity is part of a charities structure, only one company or charity can claim the allowance, and it can be applied to only one PAYE scheme even if the business or charity runs multiple schemes.

There are exemptions to the businesses able to claim the Employment Allowance, including employing someone for domestic or personal work; public authorities; and organisations which provide work of a public nature, such as local council refuse collection, GP services or prisons. p>

Due to the changes, Personal Service Companies (PSC) who pay contract fees instead of a wage or salary, also may not be able to claim as it is not possible to claim the allowance for any deemed payments of employment income.

The HMRC guidance is available HERE

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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