The employment allowance of £3,000 per year is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process using either HMRC’s Basic PAYE Tools or using other commercial payroll software packages. Once you have claimed the employment allowance, the claim will continue annually unless you stop making a claim. Eligible employers that have not yet done so can make a claim for the current 2018-19 tax year (as well as make a backdated claim for one further tax year).
If you are still receiving the employment allowance and are no longer entitled to do so you must notify HMRC. This can be done by selecting ‘No’ in the ‘Employment Allowance indicator’ field when submitting an Employment Payment Summary (EPS) to HMRC. HMRC will claw back any overpaid Class 1 NIC’s and can also charge interest and penalties on any overpaid employment allowance.
The employment allowance is not available for limited companies with a single director and no other employees. There are also a number of excluded employers who cannot claim the employment allowance. For example, persons employed for personal, household or domestic work, such as a nanny or au pair and employment that is either wholly or mainly of a public nature. No allowance is available for deemed payments of employment income.