The scheme is designed to work in two ways; incentivising some employers to take on more staff and grow, whilst others will be able to hold on to the savings and boost profitability.
The first option, the government hopes, will encourage businesses to invest and drive growth in the economy, whilst the latter will come as a relief to many small firms struggling with cash flow issues.
Who is eligible?
Almost any employer that pays Class 1 National Insurance contributions on employees’ earnings can claim Employment Allowance. This includes businesses, charities and amateur sports clubs.
If you usually pay less than £2,000 in National Insurance contributions you could be eligible to pay nothing at all.
How to claim
Employers only need to confirm their eligibility through their regular payroll processes, and the allowance will be delivered through standard payroll software and HMRC's Real Time Information system.
HMRC has developed an online calculator to see how much you could save.
The Employment Allowance, announced in the Chancellor's 2013 Budget, was a welcome development for business. From 6 April 2014 businesses have been able to cut up to £2,000 from their National Insurance bill. Find out what this means in real terms for your business.
Employment Allowance for small businesses