In the March 2013 Budget, the Government announced that, as an incentive to encourage business growth, it was introducing an employment allowance of £2,000 a year for all businesses, charities and community amateur sports clubs with employees whose earnings result in a secondary Class 1 National Insurance (commonly known as employer’s NIC) liability arising.
The £2,000 allowance commenced from 6 April 2014 (i.e. the tax year 2014/15) and is intended to be an annual allowance. It is used to offset the Class 1 secondary National Insurance contributions paid by employers as soon as such a liability arises in the tax year, but you cannot offset the allowance against primary Class 1, Class 1A or Class 1B contributions.
You can claim at any time in the tax year but if you claim late and don’t use your full Employment allowance entitlement you will have to ask HM Revenue & Customs to do one of the following:
• Use any allowance that’s left at the end of the year to pay any tax, National Insurance or VAT you owe
• Give you a refund after the end of the year if you don’t owe anything. If you are unsure whether you can claim the allowance or would like further information on this please contact us.