You may have heard in the press about Employment Allowance – where employers may receive money from the Government. But what is it exactly?

What is the Employment Allowance?

The Employment allowance is an up to £2,000 annual reduction to employers on the cost of their employer National Insurance contributions.  This allowance came into effect from the 6th April 2014 and will be in place each tax year going forward.

Who can claim the Employment Allowance?

Any employer, charity or amateur sports club (regardless of size) that produces Class I NIC contributions can claim the allowance (except the exceptions as listed further below).

How is the Employment Allowance reclaimed?

The reclaim of employer’s National Insurance is carried out through the company’s real-time information software.  If an employer needs assistance on how to process this through their payroll software, the payroll software provider will need to be contacted.

Are there any employers that can’t claim the Employment Allowance?

The following types of companies cannot claim Employment allowance:

Any domestic assistants or carers (for example, a personal hired gardener, au pair or nanny);

Any public authority or any company that carries out 50% or more  of their work for a public authority;

Any service company that operates under IR35;

Any company that is connected to another business.

Contact Peninsula online for advice on this issue, or call us on 0844 892 2772 (option 3) 24 hours a day, 7 days a week, 365 days a year.