Claiming Employment Allowance in the New Tax Year 2015/2016

Employment Allowance

Businesses and charities can continue to benefit from the employment allowance in the 2015/16 tax year. The current legislation enables employees to save up to £2,000 through reducing the amount of National Insurance Contributions (NICs) a company is required to pay for their employees.

Under the current legislation it was claimed that up to 1.25 million businesses and charities could benefit and nearly a quarter of a million businesses or charities will be exempt from paying any NIC. So, are you claiming?

Who Can Claim?

You can claim employment allowance if your business, community amateur sports club or charity is paying employees Class 1 National Insurance Contributions. However, the claim will only be accessible to businesses or charities that fall specifically under one of these categories:

  • Domestic Employees
  • Public Authorities
  • Businesses with a wholly or public nature
  • Employees claiming through connected business or charity
  • Personal service companies
  • Serviced companies

Your business or charity will only be able to claim the allowance for one PAYE scheme. If your business or charity is claiming under a group, only one company from the group will be able to make a claim.

How to claim

You can make a claim at any time in the tax year through yours or your accountant’s payroll software. This can be done by simply selecting ‘YES’ in the ‘Employment Allowance Indicator’ section of your payroll software next time you are due to send an Employer Payment Summary (EPS) to HMRC.

For those employers who still submit their returns to HMRC on paper, a paper process will be available which will mirror the IT procedures.

Already claimed in the 2014/15 tax year?

If an EPS was sent in the 2014/15 tax year, you do not need to notify HMRC again for the current tax year. The employee allowance will remain activated on both HMRC systems and on your payroll software. This will also apply if the payroll is being transferred from one payroll software to another. As it is already recognised on HMRC’s system, you will not need to make a new claim.

You will only ever need to notify HMRC once in order to activate the employee allowance. If you do stop being eligible, you will need to notify HMRC as soon as your eligibility ends.

To gain better understanding and assistance on managing your payroll, please contact suda@raffingers-stuart.co.uk

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