The National Insurance Contributions (NICs) Employment Allowance

13 March 2014

Last month the government published Employment Allowance key facts and detailed guidance to assist employers. As expected the guidance has raised some questions.


We were asked a question in respect of eligibility of schools and HMRC confirmed that generally, publicly funded schools – particularly those which are funded and controlled by local education authorities – will not be eligible for the Employment Allowance. However, if a publicly funded school has charitable status (as, for example, academies do) it will be entitled to the Employment Allowance. Independent schools will be entitled to receive the allowance on the basis that they are trading businesses (as well as, frequently, charities).


Unused balance

The guidance states that if a business with more than one PAYE scheme doesn't use the full £2,000 allowance during the year on their nominated PAYE scheme then they can apply to HMRC at the end of the tax year for a refund of any unused balance. They can only do this if they have employer Class 1 NICs liability on other PAYE schemes, and have paid all their PAYE up to date. If they do not apply for a refund, and have an un-used balance they should apply to HMRC to use this against any forthcoming PAYE debt.

“How does one apply?” is the question we asked HMRC. The reply is unfortunately inconclusive at this stage as HMRC said that the point raised is one that will not become an issue until April 2015. And as there are sure to be a range of further questions on the operation of the Employment Allowance, as we move forward they have said that they will seek to provide further Q & As where useful in due course.


CIPP comment

The Policy team will of course keep you updated with any further questions and answers as and when they arise. As we are all painfully aware, many new initiatives are up and running before issues are ever fully resolved. If you have any questions about the Employment Allowance guidance or any issues after 6 April when it comes into practice, please email policy with Employment Allowance as the subject title and we will do our best to get answers and resolutions for you.

Further information: