£2,000 employers' national insurance saving coming soon

Employers should take steps so that they do not miss out on a £2,000 cut in their national insurance contributions from 6 April 2014.

The new Employment Allowance (which was announced in the last budget) will see over a million employers – businesses, charities and Community Amateur Sports Clubs – benefit from the annual reduction in their Class 1 secondary/employers NICs.

More than 90 per cent of the employers benefiting will be small  businesses and almost half a million employers will be taken out of paying Class 1 secondary NICs altogether.

Qualifying Employers should indicate that they wish to claim the allowance either through their standard payroll software or HM Revenue & Customs’ Basic PAYE Tools. They then need to reduce their Class 1 NICs payment by an amount equivalent to the amount due, up to the £2,000 limit. This can be done as early as suits the employer – i.e. it does not need to be spread through the year.

For example, if the employer’s Class 1 NICs are £800 each month, in April and May the Employment Allowance used will be £800 and in June it will be £400, making £2,000 in total.

There are some exemptions from the scheme, including anyone who employs another person for personal, domestic or household work, such as a nanny, gardener, au pair or care support worker.

If John Kerr prepare your payroll, you don’t need to do anything. We will claim your allowance for you automatically.  But  if you need help or advice in claiming your national insurance reduction, please contact Dave Rimmer on 0151 228 8977 or by email to dave.rimmer@jkca.co.uk