How to claim back NI contributions

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Q. I have received a letter telling me I may qualify for a £2,000 rebate of National Insurance Contributions (NIC). How do I sign up?

A. The new employment allowance has been available since April 6 and allows most businesses to claim back up to £2,000 in NIC.

To be eligible you must be an employer who pays Class 1a NIC on your employees’ or directors’ wages, but some business types are exempt from the new scheme.

Notably you cannot claim the allowance if you employ staff for personal, household or domestic work. So if you have a cleaner, nanny etc you will be excluded.

Also GPs, the NHS and local authorities are ineligible, as are some businesses who supply services which are mainly of a public nature.

Providing you do not fall into any of the exempt employers criteria, you will be able to claim the first £2,000 of your Class 1a NIC back.

Most payroll software calculates the saving for you, but you must first activate the allowance. Within HMRC Basic Paye Tools, you need to enable a setting by going to Employer, Change Employer Settings and selecting ‘Yes’ in the NIC Employment Allowance section.

Sage Payroll gives a similar option within Company, Settings and “Eligible for Employment Allowance”. You will be prompted to send an EPS submission which you must do to complete the registration process.

This latest allowance does however come with one noticeable change to existing NI regulations. You are no longer able to reclaim any Statutory Sick Pay, under the Percentage Threshold Scheme, which has been abolished.

Rennie Welch LLP accept no liability on the basis of this article and detailed advice, taking into account individual circumstances, should be obtained before entering into any transaction.

Email your queries to thebusinessbrain@renniewelch.co.uk