All employers pay National Insurance (NI) alongside all of their employees. The NI contribution for the employee and the employer are dependent on the employees’ earning and what band they fall within.
HMRC offer an employers’ National Insurance allowance for all businesses.
Who is eligible for the National Insurance Allowance?
Businesses that can claim the employers’ Class 1 National Insurance Allowance are those whose NI liabilities were less than £100,000 in the previous tax year, or if they are a Charity (including community amateur sports clubs or you employ care or support workers).
You are unable to claim if you’re a company with only one employee paid above the Class 1 National Insurance Secondary Threshold (£8,840 for the 2021/22 tax year, up from £8,788 for the 2020/21 tax year) if that employee is also a director of the company.
Further guidance can be found on the HMRC Website, Click Here
Eligible businesses can claim up to the £4000 tax limit every tax year.
For example: F/T employee earns £22,000, this employee will incur £151.34 NI per month or £1,816.08 per annum. This means that the employer will not pay any NI as this falls under the NI allowance for businesses.
As soon as you have an employee that tips over this threshold, for example NI is £4,250 the employer will be expected to pay the £250.
This allowance is dependent on the individual business, not by the number of employees, so you could have two employees both on £22,000pa as per the original example and still be under the threshold.
How do I claim National Insurance Allowance?
This can be done through your payroll software or the HMRC’s basic PAYE Tool
When do I claim this National Insurance Allowance?
You will need to claim this every tax year, so make sure to claim early to ensure you receive your allowance.
If you would like any further advise on this, please do speak with your local BK Plus advisor or email us at firstname.lastname@example.org