Claim your £2,000 NI allowance this year

A new Employment Allowance

As an employer, you may be aware of the new Employment Allowance (EA) that is being introduced from 6 April 2014. But if you are not, you should be interested so read further to find out about how you can potentially reduce your NI bill by up to £2,000! For a change, there is good news on the tax front and allowances are available to almost all employers…

The facts

  • Most companies can claim the EA even where the only employee is a director
  • Those who can’t claim are anyone falling subject to IR35 (but this doesn’t affect doctors and dentists) plus some other specifics that aren’t worth mentioning
  • Only one allowance is available so double the allowance can not be claimed when someone works for more than one company (as director or otherwise).

Making a claim

Each month after 5 April 2014, after you submit your RTI full payment submission you then need to file an Employer Payment Summary (EPS) to claim the EA.

Most payroll software will work everything out for you. Or if you use a payroll bureau then it should all be in hand, but it’s worth checking.

The icing on the cake

The best news is that the allowance isn’t apportioned per month and you can in fact claim all your allowance on the earliest NI bills.

For example, if your April 2014 NI bill is £1,250, then you can reduce this to nil and have £750 (£2,000 allowance less £1,250 used allowance) to put towards the May 2014 NI bill.

Considerations

It may in fact be advantageous for a director to take more than just the basic salary as suggested in our last month’s article.