HMRC has announced that employers can decrease the NICs they pay for their workers.
From the beginning of the new tax year, 6th April 2014, employers will be able to claim Employment Allowance. Employment Allowance can save employers up to £2000 on National Insurance Contributions. In addition, those employers that pay less than £2000 per tax year will be exempt from paying employer NICs.
To be eligible to claim Employment Allowance, you have to pay Class 1 NICs on directors’ and employees’ earnings. Eligible groups include businesses, community sports associations and charitable organisations.
Employment Allowance cannot be claimed if you employ domestic workers such as cleaners, nannies, drivers and carers; if your job or business is mainly associated with public bodies such as NHS, medical, council services, or government department debt recovery; or if you already receive allowances through any connected bodies such as charities or other companies.
PSCs paying contract fees instead of salaries may not be eligible to claim Employment Allowance as the allowance cannot be claimed for employment income payments.
HMRC estimates that Employment Allowance will benefit over a million businesses and charities and nearly 450,000 of these will be exempt from paying employer NICs.
For more information on how to claim visit: https://www.gov.uk/employment-allowance-up-to-2000-off-your-class-1-nics#ee. If you need advice on your tax affairs, call K&B Accountancy Group today on 0207 078 0211 to speak to one of our knowledgeable accountants.