The Employment Allowance can reduce a business’s national insurance contributions by up to £3,000 a year.
Most British businesses and charities qualify, so long as they have at least one employee who’s paid above the secondary threshold (£162 per week in 2018-19). A company can’t claim the employment allowance if the only employee paid above the secondary threshold is a director. However, a company with at least two directors who are both paid above the threshold can claim it.
NB From 6 Apr 2020, the rules are changing slightly. If your Employer NI bill was £100,000 more more in the previous year, you won’t be eligible for the employment allowance.
Are there any types of business that can’t claim the employment allowance?
Yes, some businesses are’t eligible. Only one company in a group of companies can claim the employment allowance, and most public authorities and public service businesses (e.g. GP surgeries) can’t claim it. It’s always best to check HMRC’s employment allowance guidance or speak to an accountant.
If you have any questions about the employment allowance, please don’t hesitate to get in touch.