Do you know how to cash your £2000 Employment Allowance?

Date: 19/04/2014

Have you recently received a letter from Prime Minister, David Cameron, giving you a good news about Employment Allowance of £2000.  Prime Minister wrote that from 6 April 2014, almost all UK employers can reduce the amount of National Insurance contributions (NICs) they pay for their employees by up to £2,000.  The reduction is in employers’ contribution. Employees will keep paying the NIC as usual. It is being considered a significant move to get rid of tax on jobs.

Please click here to read the Prime Minister’s letter.

How to claim

Claiming Employment Allowance has been made very easy. You just have to click a relevant field in your payroll software.

Eligibility

Employment Allowance is for nearly all employers that pay Class 1 National Insurance contributions on their employees’ and directors’ earnings. This includes:

  • businesses
  • charities
  • community amateur sports clubs

Excluded Employers

You cannot claim the Employment Allowance, for example if you:

  • employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
  • already claim the allowance through a connected company or charity (see below)
  • are a public authority, this includes; local, district, town and parish councils
  • carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
    • NHS services
    • General Practitioner services
    • the managing of housing stock owned by or for a local council
    • providing a meals on wheels service for a local council
    • refuse collection for a local council
    • prison services
    • collecting debt for a government department

You do not carry out a function of a public nature, if you are:

  • providing security and cleaning services for a public building, such as government or local council offices
  • supplying IT services for a government department or local council

Connected businesses

If a company has control of another company, or both companies are under the control of the same person or persons for example, companies linked in a group, these companies are connected. Where this is the case, you will only be entitled to one Employment Allowance to use against one PAYE scheme (regardless of how many PAYE schemes you operate). It is up to you to nominate which PAYE scheme to claim the allowance against. If your business controls a charity, they are not connected and you can claim the Employment Allowance for both the company and the charity.