Employers are reminded to make sure they do not miss out on a £2,000 cut in their employment costs from 6 April 2014.
The new Employment Allowance will see up to 1.25 million employers – businesses, charities and Community Amateur Sports Clubs – benefit from the annual reduction in their Class 1 secondary national insurance contributions (NICs).
More than 90 per cent of those benefiting will be smaller businesses and around 450,000 firms will be taken out of paying Class 1 secondary NICs altogether.
Employers will be able to indicate that they wish to claim the allowance through standard payroll software or HM Revenue & Customs’ Basic PAYE Tools. They will then need to reduce their Class 1 NICs payment by an amount equivalent to the amount due, up to the £2,000 limit.
For example, if the employer’s Class 1 NICs are £1,200 each month, in April the Employment Allowance used will be £1,200 and in May it will be £800, 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.
At Milsted Langdon, we can advise you on whether your business or organisation qualifies for this generous saving. We can also help you save tax in other areas through careful tax planning. For further information on how we can help, please contact our tax team.