One in Ten SMEs are Missing Out on the £2,000 Employment Allowance

Future of SMEs

Back in the 2013 Budget the Chancellor announced a £2,000 employment allowance for UK businesses.
All eligible companies were guaranteed to reduce their employer Class 1 National Insurance Contributions (NICs) by up to £2,000 annually, and it was expected that many businesses would no longer have to pay any Class 1 NICs at all.

To be eligible for the allowance businesses should be paying Class 1 NICs on their employee’s or director’s earnings. The allowance can then be claimed against the company’s PAYE scheme – if the company runs multiple PAYE schemes, the allowance can only be claimed against one of them. The government hoped that this reduction in tax on jobs would encourage companies to employee more people, stimulating growth.The tax relief came into effect in April this year. However, already, a recent report by Sage has revealed that one in ten small businesses have missed out on the allowance, with many simply not knowing if they are eligible or making any attempt to claim. As a consequence, SMEs have missed out on £275m of unclaimed tax rebates.

£2,000 may not seem much but could significantly help small businesses ‘invest in new equipment, help pay off an overdraft, or pay for training for staff. This small amount can go a long way in giving small businesses the confidence to grow and expand.” (Jonathan Dowden, payroll category manager for Sage UK)
The allowance is simple to claim, either through payroll software or HM Revenue and Customs’ (HMRC’s) Basic PAYE Tools. If you have not claimed already, or want to find out if you are eligible visit Gov.UK to read HMRC’s guidance.