The Employment Allowance is a reduction in National Insurance Contributions (NICs) that an employer pays on their employees, and is worth up to £2,000 for eligible businesses and charities.
Within the first six months of its launch, 856,000 employers across the UK (84,000 across the East of England) had benefitted from the Employment Allowance. This number is expected to increase throughout the remainder of the tax year.
Announced at Budget 2013, the allowance is simple to claim and easy to administer. Businesses simply confirm their eligibility for the allowance through their regular payroll processes.
The new data coincides with a recent survey by the FSB amongst small businesses about the allowance which found that many small businesses have used it to invest in staff. 18% have used it to increase wages, 17% to hire additional staff, 12% for training, and 8% for more staff hours for current staff.
18% of small businesses surveyed have used it to invest in their businesses through equipment, machinery, or premises.
Chancellor George Osborne said:
“Today’s figures show that half way through its first year 856,000 businesses across Britain have already benefited from a cashback on jobs.
“Businesses across the country can claim a cut in their National Insurance bill, worth up to £2,000, thanks to the Employment Allowance – and if they haven’t already then I urge them to do so.
“This tax cut is part of our long term economic plan to back businesses investing in jobs. That is how you deliver greater economic security for hardworking people.”
Chief Executive of Hertfordshire Chamber, Yolanda Rugg said:
"We are in constant contact with our members — from businesses throughout Hertfordshire, 85% of which of are micro-businesses, integral to the supply chain for major pharmaceuticals, logistics companies, manufacturers and professional service providers.
"Their constant concern is the cost of doing business, particularly regarding employment. While still in its infancy, just six months old, the Employment Allowance is making an appreciable difference to their staffing costs, not only to small owner-managed businesses, but also to our SME members. We are actively promoting this initiative to our members who have viewed it as a tax on jobs. The saving of £2,000 pa is being diverted into growth stimulus activity. That's got to be a good thing."
John Allan, National Chairman of the Federation of Small Businesses (FSB) said:
"We're really pleased to see so many businesses already taking advantage of the Employment Allowance. We called on Government to help small employers invest in staff, and now we see how this additional support has been spent.
“Our members have used the Allowance by paying workers more, hiring new people and increasing training. It's also good to see a quarter of those that used the allowance to hire new staff took on an apprentice. We will work with government to raise the profile of the Employment Allowance so all the firms eligible, claim it."