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Intuit

Employment Allowance

From 6 April 2014, Employers can reduce the amount of National Insurance Contributions (NIC's) they pay for their employees by up to £3,000. This is called the ‘Employment Allowance’.  Please refer to the Eligibility section at the bottom of the page if you are unsure whether you qualify.

Turning On Employment Allowance

  1. Click the Company Cog.
  2. Click Employer Settings under Settings.
  3. On the Employer Details tab, check on the Employment Allowance Enabled checkbox.
  4. Click Save.
  5. Click the X at the top right corner to exit and return to your Company.

Processing Employment Allowance

To process the employment allowance, please run your payroll as usual.Claiming the Employment Allowance is an automatic process within QuickBooks Online, the software will automatically adjust your NIC Employer liabilities accordingly.

The liability adjustments start from the point of turning on the Employment Allowance setting.  The adjustments align to the tax periods; 6th of the month to the 5th of the following month (6 April – 5 May), even if your pay periods differ to these dates.

Viewing the Employment Allowance Adjustments

QuickBooks Online automatically posts the employment allowance adjustment to your NIC Employer liability; you can view these adjustments on the P32.
  1. Go to the  Employees or Payroll menu and click on Reports option.
  2. Click on the P32 report and open it.
  3. The Employment Allowance claim is shown on this report.

Submitting an EPS to HMRC

You are required to submit an Employer Payment Summary to HMRC if you are claiming the Employment Allowance.  This informs HMRC of the adjustment you have made to the NIC Employer liability. The EPS aligns to the tax periods; 6th of the month to the 5th of the following month (6 April – 5 May).  If you have multiple payrolls with different pay frequencies, these will be combined into one file.  The EPS submission is due by the 19th of the month.
  1. Ensure you have run all weekly and monthly payrolls for the month.
  2. Go to the  Employees or Payroll menu and click Approved and Advance option.
  3. Click Make a different RTI Submission.
  4. The second line on the form shows the Employer Payment Summary (EPS).  Click Submit to the right of the table.
  5. Complete the form as necessary and click Submit EPS.  You may not have anything to enter into the provided fields, however still click Submit EPS.

Eligibility

The Employment Allowance is for nearly all employers that pay Class 1 National Insurance contributions on their employees’ and directors’ earnings. This includes:
  • Businesses
  • Charities
  • Community amateur sports club

If your company belongs to a group of companies or your charity is part of a charities structure, only one company or charity can claim the allowance. It is up to you to decide which company or charity will claim the allowance.

Exempt Businesses and Organisations

There are a small number of businesses and organisations that are not able to claim the Employment Allowance. These include:
  • Those that employ someone for personal, household or domestic work, such as nanny, au pair, chauffeur, gardener, care support worker
  • Those that already claim the allowance through a connected company or charity
  • Those that are a public authority, this includes; local, district, town and parish council
  • Those that carry out functions either wholly or mainly of a public nature (unless you have charitable status), for example:
    • NHS services
    • General Practitioner services
    • The managing of housing stock owned by or for a local council
    • Providing meals on wheels service for a local council
    • Refuse collection for local council
    • Prison services
    • 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

Detailed Guidance and Further reading

The following links provide useful detailed guidance on the Employment Allowance:

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