National Insurance: £3,000 employment allowance from 6 April 2016 (£2,000 for 2014/15 and 2015/16)

Paid subscribers: click here for your detailed guidance on this topic

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

What's new?

Proposed 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.

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.

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.

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

Ers 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.