Lord Young, the Prime Minister’s advisor on enterprise, has recently issued The Report on Small Firms 2010-2015 which claims that there are now around 5.2 million small firms in the UK – a 760,000 increase on 2010 – and they account for 48% of employment and 33% of private sector turnover.
Heralding a ‘golden age for small firms’, Lord Young adds: “There has never been a better time to start and grow a business.”
In part, the burgeoning success of British SMEs can be attributed to the Employment Allowance that gives businesses and charities a £2,000 tax cut from their National Insurance Contributions. It was introduced in April 2014 and has so far resulted in around 450,000 small businesses being taken out of paying National Insurance Contributions (NICs) altogether.
In essence, the allowance means that eligible businesses can use up to the £2,000 limit every tax year. Therefore, a company with one employee paid £22,000 per year can write-off their Employer NICs as their payments are under the £2,000 allowance. By comparison, an employee paid £27,000 per year will generate £2,628.12 in Employer NICs per year, so under the Employment Allowance, the first £2,000 can be written off, leaving £628.12 payable for the tax year.
For the six months from 6 April 2014 to 5 October 2014, the number of Southwest employers benefitting from Employment Allowance was 80,000 which is a take-up rate of around 70%; just higher than the national average of 68%. In London, 130,000, or 65%, of employers have taken advantage of the allowance. Are you missing out?
You can claim Employment Allowance through your payroll software if you’re a business or charity paying employers’ Class 1 National Insurance. Government statistics show that an estimated one third of eligible people hadn’t claimed the allowance by the end of October. The allowance should be claimed by 19 April. For more information, please contact us.
Milsted Langdon’s payroll bureau offers employers of any size – from one employee to more than 100 – the opportunity to benefit from the expertise of our experienced payroll professionals, our up to the minute software and our comprehensive management reporting. We can keep you compliant with all payroll reporting regulations and ensure that your staff are paid accurately and on time.
Our payroll team can also provide consultancy or troubleshooting support to in-house payroll teams. To find out more about our services, please contact us.