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Businesses will not to have to pay employer’s NIC on the first £4,000, so take care when you claim!

Organisations will continue to not have to pay employer national insurance contributions (NIC) on the first £4,000 of their annual bill.

It had already been announced that, from 6 April, the allowance is available only where the Class 1 NIC bill of the business or charity was below £100,000 in the previous tax year.

You cannot claim the employment allowance from April 2021 if:

  • you’re the director and the only employee paid above the secondary threshold
  • you employ someone for personal, household or domestic work (like a nanny or gardener) – unless they’re a care or support worker
  •  you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) – unless you’re a charity
  • you’re a service company working under IR35 rules and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership)
  • Class 1 NIC liability is at or above £100,000 in the tax year before the year of the claim. This includes connected companies
  • If the business exceeds the de minimis state aid threshold

Do remember that you can claim at any time in the tax year; the earlier you claim, the sooner you will get the allowance. HMRC states that “you can make a claim for the Employment Allowance up to four years after the end of the tax year in which the allowance applies.

You must also consider any interaction you may have with the Coronavirus Job Retention Scheme.

This article has been shared from ACCA In Practice, to whom copyright belongs.  Whitefield Tax are an ACCA Member Firm