Top Tip – National Insurance Employment Allowance – CII R03, R06, AF1, AF5

THIS ARTICLE IS RELEVANT TO EXAMINABLE TAX YEAR 2021/22.

From April 2014 an employment allowance was introduced for businesses, charities and community amateur sports clubs.  The annual ‘employment allowance’ is currently £4,000 which can be offset against their liability to Class 1 secondary contributions. Effectively a £4,000 nil rate band for employers – but not employees.

This is set to rise to £5,000 in the 2022/23 tax year.

The allowance was introduced to support companies that support employment and hence is only available to companies where the director is the only employee.

It is also not available where a company’s (or group of connected companies) employers’ Class 1 National Insurance liabilities were more than £100,000 in the previous tax year.

The allowance applies per employer so if they run more than one PAYE scheme they will have to decide which scheme to claim against.

For more information on our training resources go to:

http://www.brandft.co.uk/drfp/r03.asp  – for R03
http://www.brandft.co.uk/drfp/r06.asp  – for R06
http://www.brandft.co.uk/advdf/af1.asp – for AF1
http://www.brandft.co.uk/advdf/af5.asp – for AF5