The Employers' National Insurance Contributions (NICs) allowance is an allowance given to qualifying employers to offset against their annual Employers' National Insurance liabilities. It is not a repayable credit.

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At a glance

The Employers' National Insurance Contributions (NICs) allowance is an allowance given to small and medium sized employers to offset against their annual Employers' National Insurance liabilities.

It is not a repayable credit.

Qualifying UK employers may claim an Employment Allowance to offset against employer’s NICs (ER’s NICs) and so reduce the payroll cost of being an employer.

Amount of allowance

Years 2022-23 2020-22 2016-20 2014-16

 

Allowance

 

£5,000

 

£4,000

 

£3,000

 

£2,000

 Extra restrictions    a)  b)  c)

The allowance:

  • Is available to qualifying employers.
  • Is claimed via your payroll software.
  • Can all be claimed in week 1/month 1 if sufficient Class 1 NICs are paid by the employer.

Restrictions:

The allowance may not be claimed by an employer if:

  • a) From 6 April 2020: its a secondary NICs bill is in excess of £100,000 per year.
  • b) From April 2016: if the company's only employee is the sole director or
  • It is a company with whose director is the only employee being paid above the class 1 NICs secondary threhold.
  • c) From 6 April 2015, a personal care or support worker will be a qualifying employee.
  • It is already being claimed by a connected company or Limited Liability Partnership (LLP), the connection test is based on the associated company rules.
  • No salary is paid, only a deemed payment calculated under IR35.
  • It is a connected charity or community amateur sports club, the connection test is based on the Gift Aid Small Donations tests.
  • Its employees consist of purely domestic staff, such as a nanny, chauffeur or gardener.
  • It carries on functions either wholly or mainly of a public nature.

There are also restrictions following the merger of two businesses which have claimed the allowance up until that point in the tax year.

Further details and worked examples

See Employer's NICs allowance

 

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