Top Tip – National Insurance Employment Allowance – CII R03, R06, AF1, AF5
From April 2014 an employment allowance is being introduced for businesses, charities and community amateur sports clubs. The annual ‘employment allowance’ will be £2,000 which can be offset against their liability to Class 1 secondary contributions. Effectively a £2,000 nil rate band for employers – but not employees.
According to Government figures, it is thought that up to 1.25 million businesses will benefit and as many as 450,000 will be taken out of the NI net altogether so a welcome boost in particular for small businesses.
The process to claim has been made as easy as possible with a tick box being introduced on the Employer Payment Summary (EPS) on the Real Time Information system (RTI). Once this has been ticked the employer can then offset the allowance against each monthly Class 1 secondary NI payment that’s due until either the allowance has been fully claimed or the tax year ends.
The allowance applies per employer so if they run more than one PAYE scheme they will have to decide which scheme to claim against.
Other NI changes announced in the autumn statement; a new class of voluntary NI to be introduced in October 2015 – Class 3A will give those who reach SPA before 6 April 2016 the opportunity to boost their S2P entitlement. And from 6 April 2015 employers will no longer have to pay Class 1 NI for any employee under the age of 21 on earnings up to the UEL.
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