There are a few changes to the Employment Allowance this year (2016/17), that you need to take note of:
- The allowance has increased from £2,000 to £3,000
- Eligibility – one of the main changes is if you are the directors and only paid employee, you are no longer eligibility
You could get up to £3,000 a year off your National Insurance bill if you’re an employer.
What you will get
The allowance will reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has gone or the tax year ends (whichever is sooner).
You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £3,000 each tax year. You can still claim the allowance if you pay less than £3,000 a year.
You can claim Employment Allowance if you’re a business or charity (including community amateur sports clubs) paying employers’ Class 1 National Insurance.
You can also claim if you employ a care or support worker
You can only claim Employment Allowance for one PAYE scheme.
If you’re part of a group, only one company or charity in the group can claim the allowance.
You can’t claim if:
- you’re the director and only paid employee in your company
- you employ someone for personal, household or domestic work (eg a nanny or gardener) – unless they’re a care or support worker
- you’re a public body or business doing more than half your work in the public sector (eg local councils and NHS services) – unless you’re a charity
- you’re a service company with only deemed payments of employment income under ‘IR35 rules’
You can claim Employers Allowance through your payroll software, by selecting ‘Yes’ to the ‘Employment Allowance’ field next time you send an EPS (Employment Payment Summary) to HMRC