“It’s important to keep up to date with any changes to National Insurance rates and thresholds to make sure you’re calculating the correct amounts for both employees and employers,” O’Sullivan adds.
Conclusion
Employment Allowance can provide much-needed relief for small businesses when it comes to National Insurance liabilities. By claiming this allowance, you can reduce your overall costs and potentially invest more in growing your business.
It’s important to ensure you meet the eligibility criteria and follow the correct steps to claim Employment Allowance each tax year. Keeping up to date with changes in National Insurance rates and thresholds will also help you accurately calculate contributions for both employees and employers.
Overall, the Employment Allowance is a valuable resource for small businesses looking to save on staffing costs and boost their growth potential.
Employers are required to pay more Class 1 National Insurance Contributions (NICs) than employees. The rates at which Class 1 NICs are calculated vary for employees and employers, depending on the Class 1 NICs threshold and the employee’s NI category. With over 12 different NI categories, it can be complex to understand the specific rates and thresholds. For more detailed information on NI rates, thresholds, and categories, it is recommended to review the Gov.uk pages.
If an employer needs to stop their claim for any reason, they can do so by selecting ‘No’ in the ‘Employment Allowance indicator’ field in their next EPS. However, it is important to note that stopping the claim prematurely may result in the removal of any allowance given for that tax year. Any employers’ (secondary) Class 1 National Insurance due will need to be paid if the claim is stopped before the end of the tax year.
Employers can claim the Employment Allowance at any point during the tax year, but claiming earlier ensures that the allowance can be utilized sooner. If a claim is made late and the allowance is not used against employers’ Class 1 National Insurance liabilities, HMRC may use any unclaimed allowance to offset tax or National Insurance owed. Alternatively, a refund may be issued after the end of the tax year if no amounts are owed.
The Employment Allowance can be used as soon as the claim is submitted, and HMRC will not send a confirmation letter for the allowance. If a claim is rejected, an automated message will be received within five working days. Employers can track the amount of Employment Allowance used in their HMRC online account.
In cases where the Employment Allowance counts as de minimis state aid, HMRC will send a letter confirming this status. It is advisable to keep this letter as it may be required when applying for other de minimis state aid.
For more information on employing staff, it is recommended to follow key steps to manage employment costs and maintain a productive relationship with new employees. These steps can help navigate the complexities of employing staff and ensure compliance with regulations.