Are you entitled to it?

Are you entitled to up to £3,000 off your Employers National Insurance?

 

As from 6 April 2016, employers can claim the Employment Allowance and reduce their employer Class 1 NIC by up to £3,000.

 

Who Can Claim?

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

You can only claim the £3,000 allowance against one PAYE scheme, even if your business runs multiple schemes. Note that if a company operates more than one PAYE scheme, if there is any unused Employment Allowance, and you have paid Class 1 NIC on the other scheme, you can apply (at the end of the tax year) for a refund of the unused allowances (up to any Class 1 NIC paid).

In addition, if your company is part of a group of companies, only one company can claim the allowance – you must decide which company will make the claim.

Which Dentists will it apply to?

Unfortunately, this allowance is not going to be available to all dentists as you cannot claim the allowance if you carry out functions either “wholly or mainly” of a public nature, which includes NHS services.

The legislation states that, “If you are carrying out more than 50% of your work in or for the public sector” then you don’t qualify for the allowance. There is, however, no formal legislation in place to clarify how this 50% should be calculated, for example turnover, profits, patient numbers etc.

Mixed practices will therefore need to do their homework before deciding whether or not they can make the claim.

How to Claim the Employment Allowance

You can use your own payroll software, or HMRC’s basic tools to claim the allowance.

When making the claim, you must reduce your employer Class1 NIC payment by an amount of Employment Allowance equal to your Class 1 liability, but only up to the £3,000.

For example, if your monthly employers Class 1 NIC is £1,800, in April 2016 you can reduce this liability to £nil.

The unused allowance is then carried forward and the Class 1 liability for May 2016 would be reduced to £600 (i.e. £1,800 less the £1,200 brought forward allowance).

You will be able to see how much of the allowance you have used on HMRC’s online services.

Dodd & Co will claim this allowance for all of our PAYE clients as part of our normal payroll service.

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Nov 19

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What's the best thing about Dodd & Co? Heidi Marshall. She has taken exemplary care of my business accounts - a true dental practice specialist. I would not hesitate to recommend her to any of my colleagues.
-- Anne Nicholson