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Tax Chat

The Budget – What do you need to know? – Do not miss out on £2,000 NIC saving

The Budget – What do you need to know? – Do not miss out on £2,000 NIC saving

From April 2014 you could save £2,000 on your NIC bill… it is easier than you think to check if you can claim and to find out how to do it…

From 6 April 2014 employers can claim an Employment Allowance to reduce their employer Class 1 NIC liability by £2,000.

Who can claim?

The Employment Allowance, if available, could save you up to £2,000 each year.

You can claim the Employment Allowance if you are a business or charity that pays employer Class 1 NICs on your employees’ or directors’ earnings.

However, as always there are some limitations and exceptions:

  • If you are a group company or charity then only one company or charity within the group can make the claim, however it is at your discretion which company or charity you choose to receive the allowance.
  • You can only make a claim for the allowance against one PAYE scheme.  This will only affect businesses that run multiple schemes.
  • Finally, there are some excluded employers who cannot claim and a list (together with a summary of the rules) can be found at:

How to claim

A claim must be made via your own payroll software, including HMRC’s basic PAYE tool, if you use that.  This is in the form of ticking a ‘yes’ box which means you are entitled to claim each year until ‘no’ is selected.

When making the claim, reduce your employer Class 1 NIC payment by an amount equal to your employer Class 1 NIC liability, subject to a £2,000 limit per tax year.

For example, if your employer Class 1 NIC is £1,250 per month; in April reduce it by £1,250 and in May reduce it by £750.

How your particular software deals with this may vary slightly.

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