Employment Allowance – Make sure you claim

By Graham Millar

Just another gimmick?

No.  Certain Government initiatives are outlined and introduced with much fanfare, whilst others sneak in under the radar.  Employment Allowance falls into the latter category (perhaps HMRC are hoping that your business is not aware of it), despite this being a fantastic way of adding up to £2,000 to your bottom line.

tick in box imageFrom April this year, every UK business will be allowed an annual employment allowance of £2,000 to offset against their employer’s National Insurance Contributions liability.

In theory the ability to claim this allowance is simple, as is the administration of the scheme (all you need to do is to tick “yes” on the indicator).  Further, as HMRC will be making sure the yes/no indicator is on their system, then no-one should be missing the opportunity.   The right is not automatic – you do need to be ticking the “yes” box.  (Hopefully a much easier yes/no decision than the one that we will have to make in September 2014)

If you tick the box, then you get an automatic and immediate £2,000 allowance to offset against your employers NI contributions.  To work out your savings, click on this link http://employmentallowance.com/wordpress/

Should I claim?

Absolutely.  The Government estimates that “up to 1.25m employers will benefit – with over 90% of the benefit going to small businesses with less than 50 employees”. The Government also expects that around 450,000 of small businesses in the UK will not pay any employer NICs at all. Employers with less than 10 employees over the year will, on average, see an 80% reduction in their employer NIC liability.  Regardless of your size, ultimately you will see an immediate saving of up to £2,000 on your payroll costs.

Make sure your payroll providers are on the case and just say “yes”!

If you want to discuss any employment issue, then contact me on grm@businesslaw.co.uk or 0141 428 3878.