Great publicity has been given to the new Employer’s Allowance whereby employers can reduce their Class 1 National Insurance liability with effect from 6th April 2014 by up to £2000. This is aimed at encouraging businesses to take on new employees where the cost of National Insurance can be a significant disincentive. Surely this is good news for all business owners? But apparently not! Not all businesses can claim the allowance – there are many exceptions. You thus need to ensure that your business is not excluded. If you wish to know if you are eligible for this allowance you should consult your accountant, or indeed speak to us at DEB.
It is not all good news however. As is so often the case, HMRC bestows benefits upon us but then takes away at the same time. The Percentage Threshold Scheme enables employers to recover some of the Statutory Sick Pay paid to their employees if the total falls below certain limits. This enabled small employers to recover the larger part of any Statutory Sick Pay that they incur when their employers are absent due to illness. However, from now on the cost of SSP falls fully upon the employer. The associated reduction of the related record keeping requirements will provide little compensation for the cost that now falls squarely on employers, no matter how small.
There will be winners and losers from these changes. Employers who are not excluded and who have little or no employee absence will win. Those who are excluded and who have high absenteeism due to illness will feel the full impact of the new changes. Many will fall between the two extremes. Indeed the Government suggest that employers should be able to compensate for the loss of SSP by being able to manage sickness absence. Of course they will, won’t they?
Those of us old enough to remember will recall a time when sickness benefit was something that was paid via the post office and was nothing to do with employers. This was replaced by employers being given the task and cost of administering and paying SSP with the ability to recover the cost from their PAYE/NI contributions along with compensation for their efforts. First the right to recovery for larger businesses was removed, and now it applies to all businesses. Thus the cost of SSP has been successfully transferred from the Government to business owners. Strangely, this news hasn’t received as much publicity.