Are you eligible to claim the Employment Allowance? 1

Did you know that employers can get up to £3,000 a year off their National Insurance bill?

If you haven’t been taking advantage of the Employment Allowance read on to find out more about what it is and whether your business is eligible…


What is the Employment Allowance?

The Employment Allowance was introduced in 2014 and allows certain businesses to reduce the amount of National Insurance they have to pay by up to £3,000 per year.


Who is eligible to claim the Employment Allowance?

Most employers with a liability to pay employer secondary NIC are eligible to claim Employment Allowance.

You can claim if you meet any of the following criteria:

  • You are a business or charity paying employers’ Class 1 National Insurance contributions – including community amateur sports clubs
  • You employ a care or support worker
  • You are a charity or have charitable status such as schools, academies and universities


Who is not eligible to claim the employment allowance?

It’s important to understand the rules surrounding Employment Allowance as making an incorrect claim could prove costly.

You can’t claim Employment Allowance if:

  • You’re the director and only employee paid above the Secondary NIC threshold
  • You employ someone for personal, household or domestic work such as a nanny, cook or gardener
  • You are self-employed and only paying Class 2 and Class 4 Contributions
  • You ae a public body or business doing more than half your work in the public sector, such as local councils and NHS services (unless you are a charity)
  • You are a service company working under the intermediaries’ legislation (IR35) and your only income is the earnings of the intermediary, such as your personal service company, limited company or partnership
  • If you are a large employer with total secondary NICs more than £100,000 in 2019/20, no allowance will be available in 2020/21.


How to claim the Employment Allowance

You can claim Employment Allowance through your payroll software the next time you send an Employment Payment Summary to HMRC and can claim at any time during the tax year.

You only need to claim Employment Allowance once – your claim will continue until you stop it.

If you stop your claim before the end of the tax year, any allowance you’ve been given that year will be removed and you will have to pay any employers’ Class 1 National Insurance due as a result.


If you are unsure whether you are eligible, or need some help submitting your claim to HMRC it is a good idea to employ an accounting firm to do this for you.

Get in touch with Magpie Accountancy if you would like to discuss the Employment Allowance further.


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