Claiming the Employment Allowance

The Employment Allowance was introduced in April 2014, for the purpose of helping businesses and charities by cutting the cost of employment. In April 2016 the allowance was increased from £2000 to £3000 per year for all eligible employers.

Employers with a sole employee who is also a director are not eligible for employment allowance.

The allowance will reduce your employers' (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has gone or the tax year ends (whichever is sooner). PayRun.io will automatically calculate the correct amount of allowance due on the P32 report.

You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £3,000 each tax year. You can still claim the allowance if you pay less than £3,000 a year.

For further up to date information from HMRC please visit https://www.gov.uk/claim-employment-allowance

How to claim Employment Allowance?

If you are unsure whether you qualify for the Employment Allowance, you should check with HMRC first.

To enable automatic calculation of the employment allowance on the P32 you must set the ClaimEmploymentAllowance property on the Employer to true.

A PATCH request can be issued to update an existing employer.

curl -X PATCH
   https://api.test.payrun.io/Employer/ER001
   -H 'Content-type: application/xml'
   -H 'Accept: application/xml'
   -H 'Api-Version: default'
   -H 'Authorization: {OAuthHeader}'
   -H 'Cache-Control: no-cache'
-d '<?xml version="1.0"?>
<Employer>
 <EffectiveDate>2017-04-06</EffectiveDate>
 <ClaimEmploymentAllowance>true</ClaimEmploymentAllowance>
</Employer>'
curl -X PATCH
   https://api.test.payrun.io/Employer/ER001
   -H 'Content-type: application/json'
   -H 'Accept: application/json'
   -H 'Api-Version: default'
   -H 'Authorization: {OAuthHeader}'
   -H 'Cache-Control: no-cache'
-d '{
  "Employer": {
    "EffectiveDate": "2017-04-06",
    "ClaimEmploymentAllowance": true
  }
}'

Making a late claim

In the event you need to make a late claim for Employment Allowance and you have already processed a number of payruns in the tax year you will need rewind and replay the payruns. For more information on correcting mistakes using rewind and replay see this page.