Exciting news for small business owners, starting from 6th April 2014, around 1.25 million businesses will benefit from a new Employment Allowance. The allowance is a result of the private-sector recovery and is intended to increase employment, through small businesses and charities investing the money to take on new workers.
The scheme means that as of April, those paying £2,000 or under in Employer National Insurance contributions will not have to pay anything in 2014/15, while those who pay over will have their contributions reduced by £2,000 – meaning £2,000 cashback on the cost of jobs, to be spent however you wish. The allowance is for nearly all employers (a short list of exceptions are available here) who pay Class 1 National Insurance contributions on their employees’ and directors’ earnings, and covers businesses, charities and community amateur sports clubs.
The allowance is easy to claim through your payroll software – it’s as simple as ticking a box! Sound too good to be true? Well, it really does seem to be that easy. David Cameron states that “simplicity has been the main priority in designing the allowance”… and simple it is. To reward the hard work of the British public for enduring the deepest recession in decades, the growing economy and the increase in available jobs, the government really does seem to be giving money away.
However, as well as acting as a reward for those who have stayed afloat through some tough economic struggles, the allowance also acts as an investment. Cameron urges that the money be invested into the cost of employing someone, in order to try and decrease unemployment, build stronger workforces and help our economy flourish.
To find out how the Employment Allowance will affect your National Insurance contributions, you can visit the Employment Allowance calculator. However, for a more in-depth discussion about how the allowance will benefit your small business, contact MCC Accountants. Our team of chartered accountants specialise in small businesses and can help you make the most of this government scheme. We can help you decide the most effective way to spend your allowance – whether it is employing another worker, investing in a future development, or simply putting it towards your outgoing costs – and will support you every step of the way.