HMRC has published more detailed guidance on the new £2,000 employer’s allowance which is effective from the 2014–15 tax year. Draft legislation setting out the National Insurance contributions rates, thresholds and limits for that tax year are also now available. The draft regulations and order are subject to approval by both Houses of Parliament. In addition to the draft regulations, the usual Explanatory Memorandum for each has also been published.

Readers are reminded that the new £2,000 Employers National Insurance Allowance comes into operation on 6 April 2014. To keep the process as simple as possible for employers, the employment allowance will be delivered through standard payroll software and HMRC’s Real Time Information (RTI) system.

HMRC will add a facility to the RTI Employer Payment Summary (EPS) referring to the employment allowance in the form of a “yes/no” indicator and payroll software providers will do the same. HMRC will amend its basic PAYE tools to have an EPS facility to help those employers who do not have such a facility on their software.

To claim the allowance, the employer will have to signify his intention to claim by completing the yes/no indicator just once. The employer will then offset the allowance against each monthly Class 1 secondary NICs payment that is due to be made to HMRC until the allowance is fully claimed or the tax year ends.