From 6 April 2014 employers can claim the Employment Allowance and reduce their employer Class 1 National Insurance contributions (NICs).
Who Can Claim
The Employment Allowance is available from 6 April 2014. If you are eligible you can reduce your employer Class 1 NICs by up to £2,000 each tax year.
You can claim the Employment Allowance if you are a business or charity (including Community Amateur Sports Clubs) that pays employer Class 1 NICs on your employees’ or directors’ earnings.
You can only claim the £2,000 Employment Allowance against one PAYE scheme – even if your business runs multiple schemes
You cannot claim the Employment Allowance, for example if you:
•employ someone for personal, household or domestic work, such as a nanny, au pair, chauffeur, gardener, care support worker
•already claim the allowance through a connected company or charity
•are a public authority, this includes; local, district, town and parish councils
•carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
•General Practitioner services
•the managing of housing stock owned by or for a local council
•providing a meals on wheels service for a local council
•refuse collection for a local council
•collecting debt for a government department
You do not carry out a function of a public nature, if you are:
•providing security and cleaning services for a public building, such as government or local council offices
•supplying IT services for a government department or local council
Personal and Managed Service Companies who pay contract fees instead of a wage or salary, may not be able to claim the Employment Allowance, as you cannot claim the allowance for any deemed payments of employment income.
Service companies can only claim the allowance, if you pay earnings and have an employer Class 1 NICs liability on these earnings.