In a recent survey, nearly 1 out of 3 businesses said that they were completely unaware of the new Employment Allowance, which came into effect this week.

The Employment Allowance will allow eligible businesses to reduce their National Insurance bill by up to £2000.

However the Allowance is not given automatically and you, as the employer, must make a claim on your first Employers Payment Summary (EPS) for 2014/15 by ticking the right box on your payroll software.

We are aware that, depending on what software you are using, it may not be that straightforward to find the right tick box. For example we understand that the SAGE payroll software has the claim buried within company settings.

It is important to note that some employers are not eligible for the Allowance and these include:

  • care and support employers – employing carers in their own home;

 

  • individuals who employ nannies, gardeners or other domestic servants;

In addition an employer with a business which is “wholly or mainly” of a public nature is similarly prevented from claiming this allowance. On the face of it, this will mean it is not available for :

  • GP practices;

 

  • NHS dentists;

 

  • refuse collection businesses contracting to local authorities;

 

  • meals on wheels services.   

Of course these type of businesses may become entitled to claim the Allowance if their business changes from mostly public sector to mostly private sector. Also not all public sector contracts disqualify the business from claiming the Allowance – for example cleaning or IT contracts are OK.  

Those involved in doing some public sector work together with private sector (a doctor or dentist for example) need to look closely at the provisions to find out whether they are entitled to claim this allowance.

There are further complications for group companies and where people are involved in different entities for running their businesses (e.g. a sole trader and a company).  

Of course we are here to help if you require any advice or assistance in this area.