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Wednesday, 14 January 2015 00:00

Government Assistance With Employment Costs

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Over the years there have been many Government Grants and schemes aimed at helping small businesses but these have sometimes been difficult to claim or not available to all.  

Not so with the Employment allowance launched in April 2014.

All businesses who have at least one member of staff on the payroll can claim an allowance to reduce their employers National Insurance Contributions (NICS) by £2,000 per annum and claiming this could not be easier.

A claim is made through the running of your payroll and you will pay no Employers NIC’s until you have used an amount of £2,000 as an allowance. This serves to reduce your PAYE payment to HMRC.

You are not made to wait a long time to claim this, if you have Employers NICS of £2,000 or more a month, you will receive the full £2,000 allowance in the first month of the tax year.

If you are a small business and you have an annual Employers liability of £2,000 or less you will simply pay no Employers NIC at all.

This is a real help to small businesses already employing staff and a great incentive to newer businesses thinking about taking on a first member of staff.

Employing staff is a big decision for a small business but this simple scheme offers genuine financial assistance and is something all small business owners should be aware of.

Related items

  • HMRC Vows To Crack Down On Use Of Freelance Jobs
    In relation to staff used for freelance jobs, a specialist HMRC team will target employers suspected of avoiding national insurance.

    HMRC has announced it is to form a specialist team to examine working practices at organisations that use staff for freelance jobs to fill what amount to full-time roles.

    Employers that persistently use office-based freelance workers to cover what would otherwise be full-time positions avoid offering individuals any of the associated benefits of full-time employment, such as sick pay, pensions and maternity leave, as well as avoiding employer national insurance contributions (NICs).

    If an organisation is found by HMRC to be in breach of existing laws, it could be fined up to 100% of the tax owed. The Treasury said it is currently owed more than £300m in lost national insurance contributions.

    It is unclear how widespread the practice is.  The crackdown comes at a time when HMRC is taking a renewed interest in the use of ‘umbrella companies’ to pay staff, and other unusual working arrangements that circumvent NICs and other taxes.

    Taxi-hailing app Uber and food delivery service Deliveroo are also legal cases over the status of their workers, who are currently classed as self-employed, with a tribunal decision on Uber’s case that has just come in as can be seen here:

    Uber's Employment Tribunal, on October 28th, ruled that two drivers who provide services to  Uber are 'workers' within the meaning of the Employment Rights Act 1996.

    This means they will be entitled to a limited number of employment rights .  Amongst other rights, they will be entitled to:-

    • 5.6 weeks' paid annual leave each year
    • a maximum 48 hour average working week, and rest breaks
    • the national minimum wage (and the national living wage)
    • protection of the whistleblowing legislation.

    As they are not employees, they will not be entitled to:-

    • the ability to claim unfair dismissal
    • the right to a statutory redundancy payment
    • the benefit of the implied term of trust and confidence
    • the protection of TUPE, if Uber sells its business

    I’m sure the verdict will be appealed and no doubt it is fact specific but be aware if you are taking on people under similar circumstances.

    Prime minister Theresa May recently announced a review of workers’ rights, amid concerns that almost half a million workers in the UK could be wrongly classed as self-employed. The review will look at whether the national living wage is being undermined, and what changes in legislation may need to be implemented as a result.