For many years I have been led to believe that you get ‘nothing for nothing’ and generally that is true. Except when it comes to HM Revenue & Customs’ announcement that from 6 April 2014 many small businesses will qualify for a £2,000 national insurance holiday. The allowance relates to employers national insurance payments and can be claimed through your payroll software at the time you process your monthly returns. ‘Can I benefit from this allowance?’ I hear you ask. In the main, the answer is yes if you fall into one of the following categories:
- you are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees’ or directors’ earnings;
- your company belongs to a group of companies or your charity is part of a charities structure.
You can, however, only claim the £2,000 Employment Allowance against one PAYE scheme, even if your business runs multiple schemes.
With employment being one of the largest costs for businesses, this allowance will assist many small businesses with a genuine cash advantage in what are still difficult times in the business world. Further tax advantages can also be gained by increasing the basic salary that many business owners are paid by their companies. In the past annual remuneration of between £7,500 and £8,000 has been of benefit. However, with the introduction of the employment allowance an increase to £10,000 will bring further overall savings.
In summary, I would recommend that you claim the allowance while you can. If you would like to discuss the advantages further to both you and your business, or just talk through the logistics, then contact me or any of our partners, who will be glad to help.