National Insurance employment allowance
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.
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 year.
For example, if an employer’s Class 1 NICs are £800 each month, in April their 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 where someone is employed 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.