Following on from our first article regarding the property allowance, there is also an Employment Allowance that eligible employers can claim.

Employment Allowance is a National Insurance allowance that employers can claim and set against their secondary Class 1 National Insurance liability.

The allowance is set at £4,000 for 2021/22 (capped at the employer’s secondary National Insurance liability for the year where this is lower). It was also announced in the Spring Budget on Wednesday that the allowance will increase by a further £1,000 to £5,000 for 2022/2023.

Can you claim it?

Not all employers are able to claim it. At the lower end of the scale, it is not available to companies where the sole employee is also a director. This means that most personal companies cannot benefit. However, a company with more than one employee or one where the sole employee is not a director can benefit from the allowance.

It should be noted that HMRC guidance stipulates that the allowance is not available if there is only one employee ‘paid above the National Insurance secondary threshold’ and that employee is also a director.

However, there is no requirement in the legislation for employees who are paid above the secondary threshold to be counted, and the allowance is (in accordance with the legislation) available unless all the payments of earnings in the year are made to the same person and that person is a director. This means that companies with at least two employees should, at some point in the tax year, be eligible for the allowance.

At the other end of the spectrum, companies whose Class 1 Employers National Insurance liability for the previous tax year is £100,000 or more do not qualify for the allowance.

The employment allowance has to be claimed through the payroll, if you do want any further details or information on this then please get in touch.