So the Government’s new ‘tax cut’ for businesses and charities started on 6 April 2014 and will take up to £2,000 off your Employers National Insurance Contributions in the form of an Employment Allowance.
This means that if you usually pay less than £2,000 a year in Employers NIC, this will now be reduced to zero! Great news for small businesses but will it encourage you to employ another member of staff or will you just enjoy the cut in your employment expenses? David Cameron has written to small businesses throughout the UK encouraging them to take on more employees however, with a third of all employers apparently seeing their NIC bill abolished with the introduction of this new incentive, we are not so sure that these small firms, who have had it tough in the last few years, will follow suit!
Nearly all employers that pay Class 1 NIC on their employees’ or directors’ earnings can claim, including businesses, charities and community amateur sports clubs. There are a few businesses and organisations that cannot claim, such as those with domestic employees such as a nanny or gardener, public authorities and those with public functions such as town councils and GP services.
To claim Employment Allowance, your payroll department / accountant will need to just tick a box on their payroll software – it is as simple as that.
For more information, go to https://www.gov.uk/employment-allowance or speak to your accountant. Need an accountant? We have lots of links with local accountants who we trust and work closely with. If you would like some recommendations, please give us a call.