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Issue dated 10 June 2015
Employment Allowance
From 6th April 2014 employers can claim the Employment Allowance and reduce their employer Class 1
National Insurance contributions (NICs) by up to £2,000 each tax year.
Most businesses and charities that pay employer Class1 NICs on employers’ or directors’ earning are
entitled to the allowance.
We recommend you take appropriate professional advice to ensure your business is eligible to receive
employment allowance
Liberty Accounts has, for businesses confirming eligibility, an automated procedure to handle Employment
Allowance.
How is Employment Allowance Claimed? ......................................................................................................................... 1
Setting up to handle Employment Allowance ................................................................................................................... 1
Letting HMRC know you are Claiming Employment Allowance ................................................................................. 2
Where is the Employment Allowance Recorded? .......................................................................................................... 3
How is Employment Allowance Claimed?
Employment Allowance is claimed by setting a flag on an EPS Employer Payment Summary (EPS). Then
simply reduce your employer Class 1 NICs payment by an amount of Employment Allowance equal to your
employer Class1 NICs due, but not more than £2,000 per year.
Setting up to handle Employment Allowance
From the Payroll menu navigate to Business PAYE Settings.
Payroll à Manage Payroll à Business PAYE Settings
Tick the Claim Employment Allowance box and Submit to confirm. Employment Allowance will now be
recorded automatically for each payroll run in turn until a maximum of £2,000 has been claimed.
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Issue dated 10 June 2015
Letting HMRC know you are Claiming Employment Allowance
Once you have set the Claim Employment Allowance box (above) you must confirm to HMRC that you are
claiming Employment Allowance by submitting an EPS (Employer Payment Summary). It is recommended
that this done after the first FPS have been filed after setting the allowance box.
Payroll à Government Gateway à RTI Filing à EPS à Add EPS
Confirm the sender classification and click submit.
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Issue dated 10 June 2015
From the RTI Employer Payment Summary screen click Send to submit the EPS filing. Follow the process
as normal.
Once submitted it is not necessary to send a EPS again for Employment Allowance purposes unless it is to
signify that the business is no longer eligible to claim Employment Allowance. In which case un-tick the
Claim Employment Allowance box and submit a new EPS.
Where is the Employment Allowance Recorded?
The amount of employment allowance is calculated on each payroll run and accumulated up to a
maximum of £2,000.
The amount of the claim is posted to Employment Allowance Recovered account as a reduction in
expenses and as a reduction in payroll liabilities in an account called Employment Allowance. Both of
these accounts have been newly added.
Simply pay the amount of PAYE and NIC deductions (including the Employment Allowance) by the 19th of
the next month as normal.
The Payroll Run Summary Report provides the detail on a payroll-by-payroll basis.
Payroll à Reports à Payroll Run Summary
The amount of the employment allowance to date can be inspected on the Employment Allowance
account under payroll liabilities.
Accounts à Liability Accounts à Employment Allowance.
Note at the end of payroll year 2015-16, when the year is closed the balance on this account will be reset
to zero for the new tax year
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