Employment Allowance for SMEs
Many small businesses identify at an early stage that they need help in managing, growing and developing the business (recognising both the strengths of the business owner but also the strengths that others can bring). Some businesses seek outside support but others would like to take the bold step to employ staff. One hesitation in taking this step can be the national insurance cost of employing staff members.
In the March 2013 Budget the Government announced that it would introduce an “employment allowance” of £2,000 a year for all businesses, charities and CASCs to offset against their liability for Class 1 secondary NICs, (to be implemented from 6 April 2014).
Details of this continue to be announced by HMRC:
– to keep the process as simple as possible for employers, the employment allowance will be delivered through employers standard payroll software and HMRC’s Real Time Information (RTI) system
– HMRC will add a facility to the RTI Employer Payment Summary (EPS) referring to the employment allowance in the form of a “yes/no” indicator and payroll software providers will do the same. HMRC will amend its basic PAYE tools to have an EPS facility to help those employers who do not have such a facility on their software
– to claim the allowance, the employer will have to signify their intention to claim by completing the yes/no indicator just once. The employer will then offset the allowance against each monthly Class 1 secondary NICs payment that is due to be made to HMRC until the allowance is fully claimed or the tax year ends
– the following tax year, the allowance will be available as an offset against a Class 1 secondary NICs liability as it arises during the tax year.
It is expected that HMRC will clarify the scheme and issue more detailed guidance early in 2014. The Chiks team will continue to keep everyone informed of developments but please feel free to contact Margaret Merrifield, payroll manager, with any questions.