Is your company eligible for Employment Allowance?


Since it came into effect in April this year, HMRC has announced that more than 850,000 small and medium-sized businesses are now benefiting from Employment Allowance and the lowering in National Insurance payments that comes with it – but this means that nearly a third are still not.

With an estimated 68% take-up, we can only presume that those companies yet to sign up have either not got round to it yet, or are unaware of the benefits of doing so.

What businesses are eligible?

Almost all, in fact. You just have to be a company that directly pays Class 1 National Insurance Contributions (NICs) on the earnings of your directors and employees. It’s not just limited to businesses either, with many charity and community groups also eligible.

Companies in which most of the work comprises public projects are not eligible, and nor are people who employ housekeepers, nannies etc. for their own home, but most businesses can and should claim. If you’re unsure, the HMRC website or the guidance of a professional accountant should be able to help you.

What do they gain from it?

Potentially, a £2,000 break in the employer NICs they pay every year. Companies that pay less than this on an annual basis now pay nothing at all if they are registered for the allowance. If they pay more, they can now slash two grand off the costs.

The HMRC website has an Employment Allowance calculator tool that lets business owners see the savings they can make, or enter hypothetical employees so that they can make informed decisions on hiring new staff.

How do businesses claim?

This one is surprisingly straightforward, and most companies will be able to claim through their payment software. If they use HMRC software, it can be done in a few mouse clicks. It might be a tad trickier with commercial software, but suppliers are offering users assistance on how to claim.

So why aren’t all SMEs doing this?

Businesses often struggle simply because they are paying costs unnecessarily and are unaware of the assistance available to them. This is understandable, what with business being a fast-moving world and directors not always having the time or knowledge to explore matters like tax in great detail. However, they miss out on offerings like Employment Allowance, which is a doddle to claim, as a result.

This is one reason why so many turn to outsourced accountancy services, allowing the experts to consult them on any possible ways to limit outgoings, thereby allowing them to focus primarily on controlling and growing their company.