Employers to receive £2,000 as part of new NIC allowance

Employers to receive £2,000 as part of new NIC allowance

As part of the Budget 2013, a measure was announced which will enable employers to get a little something back from the Government.  From April 2014, businesses will be able receive a £2,000 ‘employment allowance’.
The measure, which is said to be worth £1.75bn to UK employers,  will apply to the majority of businesses which employ staff via PAYE.  Though small, it is at least a contribution towards easing the financial burden of employing staff and is designed to encourage recruitment where the cost of additional PAYE is a barrier.
This measure could completely remove the Employer’s NIC burden for many very small businesses.   For example, an employer could take on one employee on a salary of up to £22,400 or up to four full time adults on the National Minimum Wage, without paying any Employer’s NI at all!
There are a few exceptions for certain employers who will not receive the allowance which include:

• If you employ someone for personal household work, for example a cleaner, gardener, chauffeur
• If you already claim the allowance through a connected company
• If you are a public authority
• If you carry out functions either wholly or mainly of a public nature (not charities) i.e. NHS services, GPs

If you are connected with other employers then you are limited to one £2,000 allowance per group, whereby you nominate which company will receive the employment allowance. You cannot split the allowance between different employers in a group.
If you would like more information or would like to discuss your tax affairs in general, please contact our Tax Partner, Chris Barrington on the details below:

Chris Barrington
email: chris.barrington@jsllp.co.uk
telephone: 01942 292505