From 6 April 2014 the government have introduced an annual Employment Allowance. This is aimed at reducing the barriers to small businesses growth by helping them with employment costs. It is hoped that this will encourage them to employ more staff.

This help is given by reducing Class 1 National Insurance contributions for most employers by up to £2,000 each year. This will mean that many small employers will pay no employers NI contributions at all.

This will be claimed through the payroll software and will be deducted from month / quarterly PAYE & NIC payments.

Certain employers, including those that employ people to carry out ‘personal, household or domestic work’ such as nannies, chauffeurs and care support workers are excluded from the scheme and therefore unable to claim the allowance. Public bodies such as local councils are also ineligible.

Contact your payroll provider for more information as to how this will operate.