Summer Budget 2015: NIC – Employment Allowance to increase from April 2016

The Employment Allowance is a relief that businesses claim to reduce their bill for employer’s NIC; at present, an employer is able to deduct £2,000 from their Secondary Class 1 NIC liability.

With effect from April 2016, the Employment Allowance will increase to £3,000. At the same time, where the director is sole employee of the company the Employment Allowance will no longer be available.

This change will have most impact on smaller employers, for whom the reduction in their NIC bill by an additional £1,000 will be very attractive. The benefit is likely to be eclipsed by the increased costs of employment resulting from the introduction of the National Living Wage.