From 6th April 2014 employers can claim the Employment Allowance and reduce their Class 1 National Insurance Contributions (NICs) up to £2000 per tax year

Employment Allowance can be claimed if the business pays employer Class 1 NICs on their employees’ earnings. Consequently, if a company belongs to a group of companies, only one company can claim the allowance.  It is possible to claim the £2000 Employment Allowance against one PAYE scheme despite businesses running multiple schemes.

However, the Employment Allowance cannot be claimed if a business is a public authority (local, district or parish church), if the allowance is already claimed through a connected company, if people are employed for personal or household work and if the business has functions of wholly or public nature (collecting debt, refusing collection for local council, etc).

In addition, it is not considered a function of public nature if the services include IT services for a government department, security or cleaning services for a public building.

We would like to give special thanks to our client Drummond Laurie, Chartered Accountants for providing this article.

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