The start of the new tax year sees the launch of the Employment Allowance, which will enable 1.25m businesses and charities to cut up to £2,000 from their employer Class 1 National Insurance Contributions (NICs).
According to statistics produced by the Treasury, 450,000 businesses will be taken out of paying employer NICs altogether in 2014/15 and 35,000 charities will benefit by around £45m in total. A business employing 10 adults on the national minimum wage will receive a tax cut of over 40%, down to £2,870 from £4,870.
Who can claim ?
The Employment Allowance can be claimed if:
- You are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees’ or directors’ earnings, but….
- If your company belongs to a group of companies or your charity is part of a charities structure, only one company or charity can claim the allowance. The allowance can only be claimed against one PAYE scheme.
However, there are exemptions and some employers are excluded.