As an employer, you will have received over the weekend, a letter from David Cameron telling you about a £2,000 National Insurance break available to businesses and charities, which came into effect on 6 April 2014.
Naturally, you will be wondering about your eligibility.The good news is that this scheme will cover nearly all payrolls, with only a few exceptions:
- Personal, household and domestic staff such as nannies and gardeners
- NHS Services
- General Practitioner services
- Other local government and public service activities
In practical terms this will mean that payroll schemes containing a nanny or other domestic staff will be excluded, as will businesses who get more than 50% of their income from public sources – such as NHS Waiting List initiatives. Hence those of you including a nanny on your payroll will be considered in terms of a cost benefit analysis of savings. Those receiving more than half of their practice income from an NHS source (not including private contracts) need to contact us to discuss.
Where there are just two directors on the payroll or family members not subject to National Insurance contributions (i.e. earning less than £8,000 per annum) then there is no benefit to be gained. We do not intend to increase salaries to claim the payments as PAYE may still be deducted and this is a direct cost and an increase in salary may not be commercially justifiable.
Regardless of different business interests you can only claim the allowance once. If you are part of a Limited Liability Partnership or other entity operating a payroll, you need to contact us to discuss.
Claiming for the scheme is simple and involves a tick box within the payroll software, so if you use our payroll service we will do this automatically on your behalf where we believe this to be the best course of action.
The amount of allowance is up to £2,000 per annum, so if your employers’ National Insurance bill is £2,000 or less the allowance will reduce it to zero. If your employers’ National Insurance bill is in excess of £2,000 per year, it will be reduced by a maximum of £2,000.
This allowance will be replaced in 2016 with allowances for employing staff under the age of 21 years.
Please contact your designated account manager to discuss any questions you may have.