{"id":5592,"date":"2024-02-22T13:34:00","date_gmt":"2024-02-22T13:34:00","guid":{"rendered":"https:\/\/www.bainesjewitt.co.uk\/blog\/?p=5592"},"modified":"2024-02-22T13:34:01","modified_gmt":"2024-02-22T13:34:01","slug":"can-i-claim-employment-allowance-for-my-business","status":"publish","type":"post","link":"https:\/\/www.bainesjewitt.co.uk\/blog\/can-i-claim-employment-allowance-for-my-business\/","title":{"rendered":"Can I claim Employment Allowance for my business?"},"content":{"rendered":"<p>The Employment Allowance is a means for SMEs to reduce the tax burden of employing staff at critical points in their growth and help avoid cash flow crises, via a reduction in National Insurance Contributions (NICs).<\/p>\n<p><!--more--><\/p>\n<p><strong>What is the Employment Allowance?<\/strong><\/p>\n<p>The Employment Allowance is a Government initiative that allows eligible businesses to reduce their annual employer NIC liability.<\/p>\n<p>Currently, NICs can be reduced by up to \u00a35,000.<\/p>\n<p>It allows employers to claim a reduction in Class 1 NICs each time they run payroll until the end of the tax year, or until the full amount has been claimed.<\/p>\n<p><strong>Is my business eligible?<\/strong><\/p>\n<p>Only certain businesses are eligible to claim Employment Allowance.<\/p>\n<p>Most critically, your business must pay some amount of Class 1 National Insurance, which means sole traders are generally not eligible.<\/p>\n<p>You can claim if you are a business, charity or community sports club which:<\/p>\n<ul>\n<li>Employs staff and pays Class 1 NICs on your employees&#8217; earnings<\/li>\n<li>Has Class 1 NICs of less than \u00a3100,000<\/li>\n<li>Is part of a group with total Class 1 NICs of less than \u00a3100,000<\/li>\n<\/ul>\n<p>Certain payments, such as off-payroll costs to contractors, are classed as \u2018deemed payments\u2019 and therefore do not count towards your \u00a3100,000 threshold.<\/p>\n<p>You are allowed to claim the allowance even if your total NIC bill is less than \u00a35,000, although you will only be able to claim up to the total of your bill.<\/p>\n<p>If your business is in Northern Ireland and you make or sell goods, you\u2019ll need to check that you\u2019re within your <a href=\"https:\/\/www.gov.uk\/claim-employment-allowance\/eligibility\">\u2018de minimis state aid\u2019 allowance<\/a>.<\/p>\n<p><strong>How to claim Employment Allowance<\/strong><\/p>\n<p>Claiming the Employment Allowance is a relatively straightforward process, depending on the payroll system that you use.<\/p>\n<p>If you use the <a href=\"https:\/\/www.gov.uk\/basic-paye-tools\">Basic PAYE Tools<\/a> from HM Revenue &amp; Customs (HMRC), you\u2019ll apply when you send your Employer Payment Summary (EPS) by:<\/p>\n<ul>\n<li>Selecting the correct \u2018Employer\u2019 name on the homepage<\/li>\n<li>Selecting \u2018Change employer details\u2019<\/li>\n<li>Selecting \u2018Yes\u2019 in the \u2018Employment Allowance indicator\u2019 field<\/li>\n<\/ul>\n<p>If you use your own software, you\u2019ll follow the same process as indicated by your provider.<\/p>\n<p><strong>Backdating Employment Allowance claims<\/strong><\/p>\n<p>Up to a certain point, you are allowed to claim Employment Allowance on previous tax years.<\/p>\n<p>Currently, you can claim for the previous four tax years, back to the 2018\/19 year, at the rate of Allowance set in that year.<\/p>\n<p>Employment Allowance was \u00a33,000 for each year between 2016\/17 and 2019\/2020, rising to \u00a34,000 in the 2020\/21 and 2021\/22 financial years.<\/p>\n<p>To claim for the years 2018\/19 and 2019\/20, you can claim Employment Allowance regardless of how much your Class 1 NICs were or how much de minimis state aid you received.<\/p>\n<p><strong>Why claim Employment Allowance?<\/strong><\/p>\n<p>Employment Allowance is one of the ways that HMRC aims to support SMEs and enhance growth.<\/p>\n<p>It isn\u2019t compulsory for businesses to claim it, but there are a number of ways that it can support your overall financial health and support your long-term business plan:<\/p>\n<ul>\n<li><strong>Tax savings<\/strong> \u2013 If you\u2019re operating on a tighter budget, additional funds provide some much-needed breathing room and a buffer against unexpected costs.<\/li>\n<li><strong>Cash flow <\/strong>\u2013 Additional funds means that you can improve your cash flow and invest in business development or expansion.<\/li>\n<li><strong>Motivating employment \u2013 <\/strong>Ultimately, this allowance is designed to encourage employment by innovative new businesses, supporting both your business and your employees.<\/li>\n<\/ul>\n<p><strong>Claiming Employment Allowance \u2013 We can help<\/strong><\/p>\n<p>Employment Allowance is invaluable to SMEs looking to save on the tax cost of employing staff. While it is fairly straightforward to claim, we\u2019re here to help to save you time and resources.<\/p>\n<p>Our team understands the intricacies of running payroll and making your business as tax-efficient as possible.<\/p>\n<p>We can help you identify your eligibility for Employment Allowance and help you integrate savings into your wider financial planning.<\/p>\n<p><strong>To speak to the experts, please get in touch with us today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Employment Allowance is a means for SMEs to reduce the tax burden of employing staff at critical points in their growth and help avoid cash flow crises, via a reduction in National Insurance Contributions (NICs).<\/p>\n","protected":false},"author":2,"featured_media":5594,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,30,132,88,44,26,7],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5592"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5592"}],"version-history":[{"count":1,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5592\/revisions"}],"predecessor-version":[{"id":5593,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5592\/revisions\/5593"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5594"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}