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The Employment Allowance

Written by Jon Cooper

One of the key incentives from the government to encourage businesses to either retain or take on additional staff is set to come into effect from 6th April 2014.

The Employment Allowance will be available to most companies that run a payroll and that pay Class 1 National Insurance Contributions on employees’ and/or Directors’ earnings.

The Employment Allowance will cover up to the first £2,000.00 of Employer’s Class 1 NIC for the 2014-15 tax year onwards.

In practise, this means that a business with either one employee earning an annual salary of £22,000 or two employees each earning an annual salary of £15,000 will have no Employer’s Class 1 NIC to pay in 2014-15.

The Employment Allowance will operate as a deduction from the National Insurance payments to HM Revenue and Customs rather than a rebate at the end of the tax year.  As such, it has an immediate positive cashflow impact.

This is to be administered as part of the overall Real-Time Information monthly payroll submissions to HMRC.

For our clients for whom we administer the payroll, we will be taking care of this for you.

For our clients who operate their payroll independently, we would advise you to verify that your payroll provider will be claiming the Employment Allowance on your behalf.

If you would like more detailed guidance on your circumstances in relation to the Employment Allowance or have a specific question on any topic, please contact admin@cooperfaure.co.uk to arrange a consultation.

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