Anyone got the dish on how this works? I've heard about it over the last few months, and am just wondering how it is administered on a month to month basis. It doesn't really affect my clients, but its good to know!!
I'm following this topic too with interest. It's supposed to start in April 2014, but everything is still up in the air... :(
It sounds like the employer's NIC is deducted from the £2,000 allowance on a monthly basis until the allowance is used up and the remainder of the NIC starts becoming payable. I believe that payroll software will need to handle this.
From the document published by HMRC (link at the bottom of this post):
"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"
Funnily enough I was just heading back to this topic after thinking about it today. Does this mean an EPS will have to be sent every month to reduce the amount of ER NI or will it be covered by the FPS ?
EDIT : If I remember correctly the primary and secondary threshold is the same from April 2014 - £153 per week.
-- Edited by Peasie on Saturday 15th of February 2014 01:16:33 AM
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My understanding is that an FPS must be submitted every time employees are paid, even if nothing is payable over to HMRC. EPS should be an exceptional thing when there was no payment to employees at all during the payroll period or other adjustments such as SSP, SMP, etc. need to be made.
So my best guess is that the payroll software will need to keep track of deductions of ER NIC from the £2,000 allowance and this should be reported within the FPS.
It would be interesting to hear the point of view of payroll vendors.
Fabs
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Tiny bit about the EPS on page 6 of the latest Employer Bulletin.
" Your software, if it has the ability to submit an Employment Payment Summary (EPS) should require you to specify if you wish to claim the Employment Allowance and you should select the appropriate response. Alternatively, the Employment Allowance can be claimed through the 2014-15 version of the Basic PAYE Tools. "
As mentioned, it's claimed until used up and appears to be pretty straightforward (which is more than I can say for trying to switch off the Export dialogue box in Adobe Reader).
