From April 2014, every employer will be entitled to an annual “employment allowance” of £2,000 to reduce their liability for employers’ national insurance contributions.

This measure was announced in the Budget 2013 and is now included in the National Insurance Contributions Bill 2013/14, which was presented to Parliament on 14 October 2013, although it was interesting to note however that the original draft bill issued in July did not include this draft legislation.

The employment allowance will be introduced from April 2014 and delivered through standard payroll software with employers only needing to confirm their eligibility through their regular payroll process.

This confirmation will ensure that up to £2,000 will be deducted from their employers’ NIC liabilities over the course of the year’s PAYE payments.

The allowance is not available to public authorities which are not charities.  It will also not be available where the employer’s national insurance contributions are incurred in respect of an employed earner who was employed wholly or partly for purposes connected with the employer’s personal, family or household affairs.

Further, where two or more companies are connected with one another, only one of those companies can qualify for the employment allowance for the tax year.  It is up to the companies or charities to decide which of them will be eligible.  Companies include LLPs and companies are connected if one of the two has control of the other or both are under the control of the same person or persons with control having the same meaning as in section 450 CTA 2010 i.e. if they would be treated as being associated for corporation tax purposes.

If you would like any further information on the employer allowance, please do contact us.

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