Employment Allowance

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In the Chancellor’s 2013 Budget statement, he announced the introduction of a new “Employment Allowance” which comes into effect on 6 April 2014.

The Allowance will give eligible employers a reduction of up to £2,000 in their employer class 1 National Insurance Contribution (NICs). It is claimed as part of the normal process through Real Time Information (RTI) and most software packages will provide the ability to make the claim from 6 April 2014.

Employers are eligible to claim the Employment Allowance if they are a business or charity (including community amateur sports clubs) that pays employer Class 1 NICs on their employees’ or Directors’ earnings. You cannot claim the allowance if you:

  • Employ someone for personal, household or domestic work, i.e. nanny, au pair, chauffeur, gardener or care support worker 
  • Already claim the allowance through a connected company or charity
  • Are a public authority, including local, district, town and parish councils
  • Carry out functions, wholly or mainly, of a public nature (unless you have charitable status). This would include NHS services, General Practitioner services, prison services etc

The allowance is not available in respect of “deemed payments of employment income” under the Personal or Managed Service company rules.

If you are part of a group of companies, or you operate multiple payrolls, only one annual allowance can be claimed.

The allowance is effected by giving a reduction of up to £2,000 against the employer’s NIC liability. The first month’s NIC liability is reduced in full by up to £2,000. Any unused balance is carried forward to Month 2 et seq until the £2,000 is used in full.

If Throgmorton look after your payroll, once we have established your eligibility to the allowance, the claim will be made in respect of the NI payment that would normally be payable by 19th/22nd May 2014.
If you would like more information, please speak to your usual Throgmorton contact or Virginia Freeman on 0118 939 3200 virginia.freeman@throgmorton.co.uk

20 March 2013 

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About Throgmorton:
Throgmorton is one of the leading companies specialising in the provision of financial and administrative outsourcing to the UK SME financial services sector.

The information in this notice is intended for general guidance only. Throgmorton does not accept any responsibility for losses incurred to any person acting or refraining to act as a result of the information in this notice. Advice should be taken in the context of specific circumstances.

Copyright 2014 Throgmorton UK Limited. All rights reserved. Throgmorton is a trading name of Throgmorton UK Limited a company registered in England and Wales (company no 3853848) having its registered office at 4th Floor, Reading Bridge House, George Street, Reading, Berkshire, RG1 8LS.