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HMRC internal manual

National Insurance Manual

Employment Allowance: Employers with multiple PAYE schemes

National Insurance Contributions Act 2014 - Section 4, subsection (5)

Employers who have more than one PAYE scheme, can only apply the Employment Allowance against one of those PAYE schemes. The employer must decide against which PAYE scheme the allowance is to be applied. Where the employer has more than one PAYE scheme they should claim the Employment Allowance against a scheme which, wherever possible, will utilise the full annual amount (or if less, the largest amount possible) of the Employment Allowance.

If the employer is unable to use up the full amount of the Employment Allowance against their chosen PAYE scheme before the tax year ends, then provided they have no outstanding PAYE liabilities owing on their other PAYE schemes, once that tax year has ended they may apply to HMRC for a refund of the unused balance of the Employment Allowance. However, see also NIM06585 where it mentions the Employment Allowance is limited to the lesser amount between the annual amount of that allowance and the employer’s total annual secondary class 1 NICs liability.

Employers operating more than one PAYE scheme may decide to transfer their existing claim for the allowance from one PAYE scheme to another. Whilst this cannot be done mid-way through a tax year, it can be done in advance of the following tax year commencing. To do this the employer will need to withdraw their existing claim for the allowance (see NIM06580) and then make a fresh claim for the allowance against the new PAYE scheme the employer now wishes the allowance to be claimed against - see NIM06570.

If an employer operates a PAYE scheme using different software providers to provide weekly and monthly payrolls, then the Employment Allowance may be applied against both the weekly and the monthly payrolls, provided both payrolls each incur secondary Class 1 NICs liabilities. However, when this is applied only one annual amount of the Employment Allowance must be provided to the two payrolls combined.

See also:

  • NIM06625 for guidance on claims for the Employment Allowance where the employer (claiming the allowance) is part of a group of companies/charities
  • NIM06590 and NIM06620 for guidance on claims for the Employment Allowance where there are connected companies/charities