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Small Employer Relief

Small businesses often feel they are a collector of tax for HMRC and we have great sympathy for...
posted 2 years ago

Small businesses often feel they are a collector of tax for HMRC and we have great sympathy for them.  That is why we think it is important that Small Employers Relief for small business payrolls take what they are entitled to, which is to claim back 3% (from 2011/12) on top of any statutory maternity payments made to employees.

Definition of 'small' for Small Employers Relief

If the employer paid or is liable to pay Class 1A National Insurance Contributions less than a fixed amount of £45,000 (from 2011/12) to HMRC in the qualifying tax year. To calculate whether the total Class 1 NICs paid or payable is £45,000 or less

-          Include employer's and employee's contributions for the year

-          Exclude Class 1A and Class 1B contributions

-          Deduct any NIC Rebate due for the year

-          Deduct any NIC Holiday claimed

New employers should divide the total Class 1 NICs due in the qualifying tax year, or due date in the current tax year (whichever is appropriate), by the number of relevant months and multiply by 12.

Qualifying Year for Small Employers Relief

The qualifying tax year for SMP, SAP, ASPP and OSPP is defined as the last complete tax year before each employee’s Qualifying Week (QW).

It is the employer's responsibility to check the QW of each employee's SMP to see if they can still be classed as a small employer, for each payment.

If you are using an outsourced payroll service or payroll bureau make sure that they have made the relevant entries in the payroll software for you to be able to claim your entitlement to Small Employers Relief.  You will be surprised at how many miss this - make sure you do not miss your Small Employers Relief entitlement.


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