How to claim your £2,000 NIC Allowance
As you may have seen from our regular updates and blog posts, the new £2,000 NIC allowance is a welcome measure for all employers who are entitled to the relief. In most cases employers will receive the allowance via the operation of their payroll, meaning that making the claim is straightforward and simple for the vast majority. The Government will pay the first £2,000 of Employer's NI in the new tax year.
However there are restrictions for companies which are considered to be ‘connected’.
These companies will only receive one £2,000 allowance and they must actively decide which company they would like the allowance to apply to.
It is also important to note that not every employer will qualify for the allowance.
WHO IS ‘CONNECTED’?
The basic rule for determining if two companies are connected with each other is where:
• One company has control of the other (for example subsidiary companies within groups); or
• If both companies are under the control of the same people.
EXAMPLES OF ‘CONNECTION’
• Groups where the companies are controlled by the same people – even where the underlying businesses are different;
• Where there is a degree of ‘financial interdependence’ (for example where one company is financially supported or assisted by another);
• Where there is a degree of ‘economic interdependence’ (for example where companies rely on one another to reach the same economic objective, or have common customers);
• Where there is a degree of ‘organisational interdependence’ (for example where companies have common management, employees, premises and equipment);
• Other factors can also lead to connection. These include fixed rate preference shareholders in more than one company, loan creditors who are able to exercise an influence over more than one company and trustees.
WHO IS EXCLUDED?
The allowance is very widely available and most employers will be entitled to claim their £2,000. However, there are some employers who will be excluded from claiming the allowance:
• 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, GP’s.
WHAT ABOUT EMPLOYEES UNDER 21?
The Chancellor announced during his 2013 Autumn Statement that from 6 April 2015, employers who employ staff under the age of 21 will not be liable for Employer’s NIC’s for these members of staff.
This means that qualifying staff will be able to earn up to the Upper Earning Limit (currently £797 per week) and no Employer’s NIC’s will be payable. Once earnings for qualifying staff exceed this level, the exemption will be removed.
If you would like more information regarding the Employment Allowance, please contact our payroll team on the details below:
telephone: 01942 292557
telephone: 01942 292546