As was mentioned in our post on the 2013 Budget from April 2014 most employers will be able to claim a £2,000 annual allowance to set against the employer’s class 1 NICs due on their employees’ wages and so reduce the payroll cost of being an employer. It is straightforward to claim, all you need to do is a tick box on your payroll software and the first Employer Payment Summary (EPS) submitted for 2014/15 will notify HMRC of the claim.
Once the claim is made it stays in place for all future tax years, until the PAYE scheme is closed or the Government withdraws the allowance. Only employers can claim the employment allowance.
For 2014/15 Employers NIC is payable at a rate of 13.8% on employment earnings in excess of £153 per week (£7,956 per year), so the £2000 allowance will fully offset:
- one employees salary of £22,4k;
- or two part-timers on salaries of £15,2k each etc
This relief is available to most employers and is intended to encourage employment and this should be an incentive at least to offer additional hours to an existing employee without an additional employers only cost. This is based on our understanding of the system which will be used but may not apply to your situation, as for example there are excluded groups of employers, so you should seek professional advice before taking any steps based on the contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”