For some time now, employers have been able to reduce their Class 1 NI contributions that relate to their employment of staff. The relevant relief, the employment allowance, is worth up to £3,000 per year and is available to most businesses and charities to be offset against their employer’s Class 1 NIC bill.
Claiming the allowance is fairly straight forward, all that is required is a tick in the relevant box in your payroll software.
Eligible employers that have not yet done so can still claim for the current 2017-18 tax year (as well as make a back dated claim for one further tax year).
There are restrictions that limit claims for this relief. For example, the relief is no longer available for limited companies with a single director and no other employees.
There are a number of other excluded categories, these include:
- Persons employed for personal, household or domestic work, such as a nanny or au pair (unless they are a care or support worker);
- A public body or business doing more than half of its work in the public sector;
- A service company working under ‘IR35 rules’ whose only income is the earnings of the intermediary.
Please note, the relief only applies to your employer’s Class 1 NI contributions, you cannot set-off the £3,000 allowance against employees’ Class 1 NIC deductions.
Please call 01482 425499 if you need help adjusting your payroll software to claim this relief, or to make a back dated claim.