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National Insurance Updates: Are you aware of the changes?

The National Insurance Contribution Threshold will rise to £9,500 a year on 6th April 2020, consequently 31 million UK taxpayers will begin to pay less national insurance!

This means that the typical employee will pay around £104 less in 2020/21, and self-employed people who pay national insurance at a lower rate will have £78 cut from their bill.

Employment Allowance Changes

Employment Allowance currently allows certain businesses who employ staff to reduce their National Insurance bill by up to £3,000, however important changes to the eligibility criteria are due to be introduced from 6th April 2020.

HB Accountants National Insurance changes

The Employment Allowance scheme was first introduced in April 2014, giving employers a reduction of £2,000 against their Employers’ NI bill. In April 2016 the value of the relief was boosted to £3,000, and at this time, the scheme was reformed to exclude single-director companies. For 2019/20 the Employment Allowance remains at £3,000.

The allowance is claimed via the payroll process, as the liability arises. It reduces a company’s Employer’s national insurance each time they run payroll, until the £3000 allowance runs out or the tax year comes to an end (whichever is sooner).

If you are worried about running payroll, HB Accountants provides a payroll management service to organisations in Hoddesdon, Broxbourne, Ware, Hertford and across Hertfordshire, Essex and Cambridgeshire. We deal with businesses of all sizes, from small independent businesses to limited companies with over 100 employees. We use HMRC digital compliant software and can prepare your payroll each month, tailored to your company’s individual needs. Contact us on 01992 444466 or via email directors@hbaccountants.co.uk.

Eligibility up to 5th April 2020

Until 5th April 2020, businesses with employees can claim the Employment Allowance, unless:

  • The employee is employed for domestic duties for example a housekeeper
  • The sole director is the only employee paid above the secondary earnings threshold
  • The business is a public body or is doing more than half of its work in the public sector (unless it is a charity)
  • The company only has deemed employment income under the IR35 rules.

If your business is in a group of companies or has related companies under the same control, only one company in the group can claim the allowance.

Eligibility from 6th April 2020

From the 6th April 2020, the Employment Allowance will only be available to smaller businesses who had an Employers’ NI bill of £100,000 or less in the previous tax year.

The existing restrictions outlined above will also continue to apply.

Our advice is to always consult with your accountant – Our Tax Specialist Amy would always be happy to speak with you if you have any queries regarding any Tax updates and questions you have – call 01992 444466 or contact her by email at amy@hbaccountants.co.uk and she will advise you on the best cause of action for you.

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