- Location
- Northumberland
General description of the measure
From April 2014, every business, charity and CASC will be entitled to an annual “employment allowance” of £2,000 to reduce their liability for Class 1 secondary National Insurance Contributions (NICs).
Policy objective
The allowance aims to reduce the barriers faced by small businesses, charities and CASCs which wish to grow by supporting them with the costs of employment. The measure is expected to have a positive impact on businesses and civil society organisations by reducing their employer NICs bill. Up to 1.25 million employers will benefit, with over 90 per cent of the benefit going to small businesses with fewer than 250 employees. As a result 450,000 small employers will no longer pay Class 1 secondary NICs in 2014-15 and, on average, employers with fewer than ten employees over the course of the year will see their employer NICs bill reduced by 80 per cent.
Background to the measure
In the March 2013 Budget, as part of its strategy to encourage business growth, the Government announced that it will introduce an employment allowance of £2,000 a year for all businesses, charities and CASCs to offset against their liability for Class 1 secondary NICs.
To keep the process as simple as possible for employers, the employment allowance will be delivered through standard payroll software and HMRC’s Real Time Information (RTI) system. HMRC will add a facility to the RTI Employer Payment Summary (EPS) referring to the employment allowance in the form of a “yes/no” indicator and payroll software providers will do the same. HMRC will amend its basic PAYE tools to have an EPS facility to help those employers who do not have such a facility on their software.
To claim the allowance, the employer will have to signify his intention to claim by completing the yes/no indicator just once. The employer will then offset the allowance against each monthly Class 1 secondary NICs payment that is due to be made to HMRC until the allowance is fully claimed or the tax year ends. The following tax year, the allowance will be available as an offset against a Class 1 secondary NICs liability as it arises during the tax year.
From April 2014, every business, charity and CASC will be entitled to an annual “employment allowance” of £2,000 to reduce their liability for Class 1 secondary National Insurance Contributions (NICs).
Policy objective
The allowance aims to reduce the barriers faced by small businesses, charities and CASCs which wish to grow by supporting them with the costs of employment. The measure is expected to have a positive impact on businesses and civil society organisations by reducing their employer NICs bill. Up to 1.25 million employers will benefit, with over 90 per cent of the benefit going to small businesses with fewer than 250 employees. As a result 450,000 small employers will no longer pay Class 1 secondary NICs in 2014-15 and, on average, employers with fewer than ten employees over the course of the year will see their employer NICs bill reduced by 80 per cent.
Background to the measure
In the March 2013 Budget, as part of its strategy to encourage business growth, the Government announced that it will introduce an employment allowance of £2,000 a year for all businesses, charities and CASCs to offset against their liability for Class 1 secondary NICs.
To keep the process as simple as possible for employers, the employment allowance will be delivered through standard payroll software and HMRC’s Real Time Information (RTI) system. HMRC will add a facility to the RTI Employer Payment Summary (EPS) referring to the employment allowance in the form of a “yes/no” indicator and payroll software providers will do the same. HMRC will amend its basic PAYE tools to have an EPS facility to help those employers who do not have such a facility on their software.
To claim the allowance, the employer will have to signify his intention to claim by completing the yes/no indicator just once. The employer will then offset the allowance against each monthly Class 1 secondary NICs payment that is due to be made to HMRC until the allowance is fully claimed or the tax year ends. The following tax year, the allowance will be available as an offset against a Class 1 secondary NICs liability as it arises during the tax year.