Payroll costs are likely to be one of your organisation’s biggest outgoings. Finding new ways to reduce this labour expenditure makes good financial sense – especially in the current economic climate. Employment Allowance 2022/23 is one of HMRC’s tax relief schemes that could offer your business, charity or amateur sports club a helping hand.
Up to £5,000 in Employment Allowance is available for the current tax year, and claims for previous tax years are allowed. If you’re eligible, this is a cash flow opportunity you shouldn’t ignore.
Our breakdown of Employment Allowance asks:
Employment Allowance 2022/23 is a government initiative that helps your organisation reduce its employers’ Class 1 National Insurance (NI) contributions.
If you’re eligible, and make a successful claim to HM Revenue & Customs (HMRC), you’ll reduce your employers’ Nl by up to £5,000 for the 2022/23 tax year. The allowance is easy to set up and is applied automatically through your payroll software.
With Employment Allowance applied:
There’s a more detailed overview of Employment Allowance 2022/23 here.
To be eligible for Employment Allowance you must be an employer and meet the threshold for your Class 1 NI contributions. Organisations that can claim the allowance include businesses, charities (including amateur sports clubs) and private employers of care or support workers.
To meet the eligibility criteria:
We’ve got more details on the eligibility criteria here.
Thankfully, making a claim for Employment Allowance 2022/23 is a relatively straightforward process for eligible organisations. There are two main routes for claiming the allowance and cutting your Class 1 NI contributions.
The two options are:
Follow our step-by-step instructions for making an Employment Allowance claim here.
One of the main benefits of Employment Allowance is that claims for previous tax years are allowed. These retrospective claims can go back as far as the 2018/19 tax year, and will be calculated at the historic rate for that period.
Depending on your situation, you may be able to claim £3,000 for each of the 2018/19 and 2019/20 tax years. If you’re eligible, you can claim up to £4,000 for both 2020/21 and 2021/22. And that’s all in addition to the £5,000 threshold for the current tax year 2022/23.
Claiming for this tax year and the four previous years frees up a potential £19,000 in employers NI contributions. That’s money you can use to boost your cash flow, helping you reinvest in growth, expand your team or buy new assets.
If you’re an employer and meet the criteria, Employee Allowance is an opportunity you shouldn’t pass up.