Did you know that, as an employer, you may be eligible for the Employment Allowance. You can use this to offset up to £5,000.00 off your employer National Insurance bill for the year.
Additionally, as a small employer, you may also qualify for Small Employers' Relief, which means that you can reclaim an additional 11% (103%) of any statutory parental pay that you pay to your employees within the tax year.
Employment Allowance
If you are an employer that pays Class 1 National Insurance for your employees, you can offset up to £5,000.00 per tax year off your Employer National Insurance pay bill.
If your employer's national insurance bill exceeds £5,000, you'll pay just the difference. Or if it's under £5,000 per year, for example, £2,000, you'll pay no employer national insurance at all. You won't be able to reclaim the remaining £3,000, though.
You can claim your Employment Allowance at any point during the tax year. Please refer to HMRC's guidance to check if you're eligible.
Small Employers' Relief
If your gross national insurance bill (employee and employer national insurance) for the previous tax year was less than £45,000 before the deduction of Employment Allowance, you're eligible to recover an additional 11% of any statutory parental leave you've paid to employees.
This means in total, you can reclaim 103%, which is broken down into 100% recovery and 3% compensation.
To check your eligibility, please refer to HMRC's guidance.
Example calculation
You pay £600 in statutory maternity pay to an employee this month.
Without Small Employers' Relief
Without Small Employers' Relief, you can claim 92% of the amount paid.
£600 x 92% = £552
With Small Employers' Relief
With Small Employers' Relief, you can claim 100% of the amount paid, and 3% compensation.
£600 x 100% = £600
+ £600 x 3% = £18
A total recoverable amount of £600 + £18 = £618
Set up in PayFit
To set up Small Employers' Relief:
From the left, choose Company settings, then HMRC information.
Under the Employer registration details section, click Edit details.
Under the Settings section, toggle on the Company qualifies for Small Employers' Relief option.
Click Save.
To set up Employment Allowance:
From the left, choose Company settings, then HMRC information.
Under the Employer registration details section, click Edit details.
Under the Settings section, toggle on the Claim employment allowance option.
Click Save.
Your Small Employers' Relief and/or Employment Allowance is shown on the employer payment record report, and reduces your overall amount due to HMRC. To view this report:
From the left, choose Reports, then Company reports.
Under the Payroll reports selection, click Employer payment report.
From here, you can choose to download the report as a PDF or Excel file.