NIC Employment Allowance from April 2014

Businesses, National Insurance, Payroll l

Hands with calculator and accounting formFrom April 2014 every UK business will be allowed an annual employment allowance of £2,000 to offset against their employer’s NIC liability.

The NIC employment allowance will be simple to administer and claim, and is unlikely to increase administration costs. The allowance will be provided through standard payroll software and HMRC’s Real-Time Information Systems (RTI) as part of the Employer Payment Summary which is currently used to reduce the NICs payable in respect of recoverable SSP and SMP etc.

Eligibility for the allowance will be confirmed through the company’s regular payroll processes, and the £2,000 allowance will be offset against employer NIC over the year’s PAYE payments.

Will this benefit you?

This new allowance will particularly benefit smaller businesses looking to hire additional employees, as it will lower the costs of employing staff.

The Government estimates that “up to 1.25m employers will benefit – with over 90% of the benefit going to small businesses with less than 50 employees”. The Government also expects that around 450,000 of small businesses in the UK will not pay any employer NICs at all. Employers with less than 10 employees over the year will, on average, see an 80% reduction in their employer NIC liability.

For example: According to the HM Treasury, every business can pay one employee a salary of up to £22,400, or four employees on the national minimum wage without any employer NICs liability.


From 6 April 2015 no employer’s NIC will be payable on earnings up to the Upper Earnings Limit (currently £797 per week) for all employees aged under 21. For more details please go to 2013 Chancellor’s Autumn Statement on our website.