The Employers' National Insurance Contributions (NICs) allowance is an allowance given to all employers to offset against their annual Employers' National Insurance liabilities. It is not a repayable credit.

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At a glance

From April 2015

  • From 2015/16 Employers NIC is abolished for under 21's.
  • The relief is extended to cover personal care and support workers.

From 6 April 2014

Most employers may claim a £2,000 Employment Allowance (EA) that may be offset against employer’s NICs (ER’s NICs) and so reduce the payroll cost of being an employer. The EA is:

  • Available to all sizes of business, with certain exceptions.
  • Claimed via the payroll software.
  • Claimed from 6 April 2014 onwards.

This measure was originally announced in the 2013 Budget.

What's new?

From 6 April 2020

  • Those with an Employer National Insurance Contributions bill of £100,000 or more in the previous tax year will not be entitled to claim. 
  • Where employers are connected under the Employment Allowance rules the threshold will apply to their aggregated liability.
  • Budget 2020 announced that the employment allowance is increased from £3,000 to £4,000.

From 6 April 2016

  • Employment allowance to increase to £3,000.
  • Employment allowance will not be available for companies where the director is the sole employee.
  • No employers' NIC payable in respect of apprentices under the age of 25.

Overview

How it works

  • The employers must tick a box on their software in order to claim the allowance at the start of the tax year. 
  • This relief may have a positive effect for many employers and so it is advisable to consider staffing and salary levels.

From 2015 - additionally

Employers NICs are abolished for any employees who are under 21 and have earnings of up to £813 per week (£42,276 p.a.)

Other information:

The new employers NICs Holiday scheme ended in September 2013.

Excepted employers

The allowance may not be claimed by an employer if:

  • From April 2016 it is a sole employee/director company.
  • It is already claimed by a connected company or charity.
  • Its employees consist of domestic staff, such as nanny, chauffeur or gardener (see above re. personal care and support workers from April 2015).
  • See HMRC Employer Allowance guidance for further exceptions for public authorities or employers who carry out public services.

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