The urgency with which employers were required to get to grips with HMRC’s Coronavirus Job Retention Scheme (CJRS) was challenging to say the least. Some emerging issues have had to be resolved en route and it was inevitable that some errors would occur with incorrect applications for the furlough scheme.
An area of confusion has arisen around the Employment Allowance which exempts most employers from paying the first £4,000 (up from £3,000 in earlier years) of Employers National Insurance Contributions (NIC) they would otherwise be required to pay. Please see here for more details.
Many employers will have deliberately not claimed the Employment Allowance in April (when they would normally claim), as they had much or all of their workforce on furlough with Employer’s NIC being covered under the Coronavirus Job Retention Scheme.
The rules for claiming and applying the Employment Allowance have not changed because you are claiming a CJRS grant for Employer’s NIC and eligible employers can use the allowance to pay less NIC until the allowance runs out or until the end of the tax year, whichever comes sooner. However, the Employment Allowance can’t be spread out across the tax year if it would have been exhausted sooner.
With more employees now returning to work, employers should remember to claim this again now, through your payroll software or via your payroll bureau. Claiming your Employment Allowance later in the year will be beneficial to many as it protects the availability of the allowance for the time when furloughed employees have returned rather than ‘wasting’ it to reduce the CJRS claim.
If you still have a significant amount of your workforce furloughed, it will still be in your interest to claim the allowance with effect from August, since you will otherwise be liable for Employer’s NIC on furloughed staff’s wages from 1 August. Please see here for more details of these changes.
As long as you do not receive relief for the same employer NIC costs twice, eligible employers can claim Employment Allowance at any point in the tax year and for four years afterwards. Still confused? Contact the experts at CRM to clarify any of your queries on 01865 379272.