The Employment Allowance is a scheme that allows eligible employers to reduce their National Insurance contributions (NICs) by up to a certain amount. This allowance was introduced in 2014 as a way to encourage employers to hire more workers and stimulate economic growth.
Under the scheme, eligible employers can reduce their NICs by up to £5,000 per year. This means that the first £5,000 of the employer’s NICs liability is effectively cancelled out. The allowance is claimed through payroll software or HM Revenue and Customs’ online service, and it can be claimed at any point during the tax year.
To be eligible for the Employment Allowance, an employer must meet the following criteria:
· Have a business located in the UK.
· Be an employer that pays Class 1 National Insurance contributions on their employees’ earnings.
· Have paid total employer’s NICs of less than £100,000 in the previous tax year.
· Not be a domestic employer or a public authority.
It is important to note that if an employer is the only employee in their company, they cannot claim the Employment Allowance. Additionally, if an employer is part of a group of companies, they will only be able to claim the allowance once for the entire group.
Employers should also be aware that if they are found to be ineligible for the Employment Allowance, they may be required to repay any savings they received under the scheme.
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