National Insurance employment allowance
Following the Royal Assent of the National Insurance Contributions Act 2014, the £2,000 NIC Employment Allowance can now be offset against Class 1 secondary NICs from 6 April 2014.
The allowance can be claimed as part of the normal payroll process through RTI using either an employer’s own payroll software or HMRC’s Basic PAYE Tools. The maximum amount available is capped at £2,000 per tax year.
For example, if an employer’s Class 1 NICs are £1,200 each month, in April their Employment Allowance used will be £1,200 and in May £800. 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 include employment of personal, household or domestic staff, 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.
HMRC has recently updated the guidance on the eligibility of Independent Pharmacies to claim the Employment Allowance.