Employment allowance usage
The employment allowance of £2,000 per year for all businesses and charities was made available from April 2014. The allowance is offset against the employers Class 1 secondary NICs and can be claimed as part of the normal payroll process. The maximum amount available is capped at £2,000 per year.
By the end of June, 725,000 employers across the UK used the employment allowance. If an employer’s Class 1 NICs are £800 each month, in April the employment allowance used will be £800, in May £800 and in June £400. HMRC will automatically carry the claim forward each year but should be notified if there has been a change in circumstances that would affect an employer’s entitlement to the allowance.
There are a number of excluded employers who cannot claim the employment allowance. These employers include those employing someone for personal, household or domestic work, such as a nanny or au pair and functions that are either wholly or mainly of a public nature. In addition, no allowance is available for deemed payments of employment income.