From 6th April 2014 employers are able to claim Employment Allowance. This Allowance reduces the NIC Class 1 payable by employers by up to £2000 per year. The aim of this allowance is to make it easier and less of a financial burden on small businesses to employ staff.
Not all businesses can claim the Employment Allowance however. Employers that cannot claim this allowance are those that:
- employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
- already claim the allowance through a connected company or charity
- are a public authority, this includes; local, district, town and parish councils
- carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
- NHS services
- General Practitioner services
- the managing of housing stock owned by or for a local council
- providing a meals on wheels service for a local council
- refuse collection for a local council
- prison services
- collecting debt for a government department
The allowance can be claimed through your payroll software by automatically reducing the Employer NICs payable up to £2000. HRMC will automatically carry the claim forward for succeeding tax years.
Further information is available from the Government website at Employment Allowance.