Do you want HMRC to give you £2,000? If you do, claim the Employment Allowance next month

The Employment Allowance is one of the best recent tax cuts for employers….and it starts in April. But, are you sure you’ll be getting the benefit?

From 6 April, nearly every employer that pays Employer Class National Insurance Contributions will get the first £2,000 knocked off their bill. So, if your current Employers NIC bill is less than £2,000, you’ll pay nothing.

This is the equivalent of being able to take on your first employee at a salary of £22,400 with no tax bill.

Am I eligible for the Employment Allowance?

You’re eligible if you are a business or charity that pays Employer Class 1 NICs on your employees’ or directors’ earnings. The key is that you must employ someone – a sole trader or partnership can’t claim the allowance for the owners as there’s no actual employment involved.

However, there are some exceptions. You can’t claim if you:

  • 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

You do not carry out a function of a public nature, if you are:

  • providing security and cleaning services for a public building, such as government or local council offices
  • supplying IT services for a government department or local council

There is detailed guidance available here.

How do I claim the Employment Allowance?

You do have to apply to be part of the scheme. We’re applying on behalf of all of our payroll clients. If you do your own payroll or use another provider, make sure you don’t miss out. It might be as simple as ticking the box on your software….but you need to do it to get the £2,000!

Any questions?

If you would like to arrange a free meeting with a Liverpool accountant to discuss business taxes, either at our office or at your premises, please contact us on 0151 724 3960 or by email at [email protected].

Alternatively, you can use our website contact form.

For tax tips and ideas to boost your profits, please sign up for our email updates.

Added by Jon Davies

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