There were two measures in the Budget to help employers with the cost of paying Class 1 national insurance contributions (NIC) also known as the payroll tax.
The employment allowance is currently worth £3,000 per year and can be claimed by almost all employers in the private sector, although not by one-person companies. This allowance is set against the employer’s Class 1 NIC payable for the year.
From 6 April 2020 the employment allowance will increase to £4,000 but its scope will be further restricted to employers whose employer’s Class 1 NIC bill for the previous tax year was less than £100,000. We can help you check how much your business has paid in NIC for 2019-20 and whether you need to adjust any last minute bonuses to keep within the £100,000 cap.
To encourage businesses to employ ex-service personnel the government is proposing that no employer’s NIC would be payable on such an individual’s pay in their first year of civilian employment. This NIC ‘holiday’ would apply to the individual’s pay below the upper earnings limit which is currently £50,000 per year. However the veteran’s NIC relief will not come into effect until 6 April 2021 by which time the upper earnings limit may have changed.
