The document explains the Employment Allowance, which allows eligible employers to reduce their National Insurance Contributions (NICs) by up to £3,000 per business for the 2016-17 tax year. Eligibility is primarily for employers paying Class 1 NICs, while freelancers and public sector employers are excluded. The document also outlines the claiming process through payroll software like Pegasus Opera 3, emphasizing the steps needed to inform HMRC and update necessary documentation.

1. Employment Allowance
explained
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2. What is Employment Allowance
(P32 Processing)
• Employers can reduce the amount of National Insurance contributions (NICs) that
they pay for their employees by up to £3,000. This is called the ‘Employment
Allowance’.
• Employment Allowance of up to a maximum of £3,000 can be claimed for the 2016-
17 tax year
• Also note the Employment Allowance is allowance per business, not per employee.
See the www.gov.uk/employment-allowance page for detailed information.
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3. Eligibility
Who is eligible:
• All employers who pay Class 1 National Insurance on their employee’s earnings
Who is not eligible:
• Most freelancers and contractors (who pay Class 2 and Class 4 NICs) cannot claim
Employment Allowance.
You also cannot claim the HMRC Employment Allowance if you:
• Personally employ someone for domestic work (e.g. a nanny or gardener)
• Provide services in the public sector
• Provide services (e.g. IT contracting) to a public sector body
Important to remember:
It is available for businesses, charities and Community Amateur Sports Clubs
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4. How to claim
Important: You can claim through your Payroll Software.
For instance, in Pegasus Opera 3 this value is held in a new box on the NI
For the full instructions please follow this link to watch a video
http://www.intsysuk.com/#!training-videos/c1v2d
What you must do:
• You must have previously informed HMRC that you want to claim the allowance
before you can reduce your payment of Employer Class 1 NICs.
• Submit EPS with the ticked option
• Update the P32 with the employment allowance that you are claiming for the tax
month or quarter.
Next Slides will give you guidance on what you would need to do in Pegasus Opera 3
Payroll Software
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5. How to Inform HMRC you will be
claiming
Follow these steps when you are ready to send your Employer Payment Summary to
HMRC for the tax month or quarter.
You only need to inform HMRC once - not once every tax year.
In Pegasus Opera 3:
• Click the Payroll & HR tab on the Ribbon Bar and then click Payroll - RTI
Submissions.
• Click Employer Payment Summary.
• Complete page one as normal and click Next.
• On page two, under Employment Allowance select the Start or cease claiming
employment allowance box and on page two and select ‘Start Claiming’ from the
list. When the Employer Payment Summary is submitted this signifies to HMRC
that the allowance will be claimed.
• Click Start to submit the Employer Payment Summary.
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6. To update the P32 with the claimed
Employment Allowance
In Pegasus Opera 3:
Follow these steps to update the P32 with the employment allowance that you are claiming for the tax
month or quarter.
• Open the Payroll folder and then click P32 Processing or click the Payroll & HR tab on the Ribbon
Bar and then click Payroll - P32 Processing.
• Open the Employment Allowance form from the Action menu, enter the amount of the
Employment Allowance you wish to claim, up to the annual limit. Select OK and close the P32
Processing form.
Notes:
- You can claim the full allowance in a single month if your employer's NICs due exceeds the limit. You
should enter the amount claimed on the each month on the P32 Processing - Employment Allowance
form.
- When you pay Income Tax and employer's and employees' NICs to HMRC you must adjust your
payment by the amount of the Employment Allowance you are claiming.
Tip: Visit www.gov.uk/employment-allowance for detailed information about the employment
allowance.
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7. Payroll Specialists
Intsys are Pegasus Payroll specialists with the expertise to implement the
extensive features of Opera 3 Payroll. Working closely with your payroll
professionals, we can provide payroll software implementation, consultancy
and training. Complemented by award winning support services.
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8. March 16
INTSYS
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