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HMRC internal manual

PAYE Manual

Employer returns: NICs employment allowance: effect on PAYE payments

Employers cannot restrict their PAYE payments to HMRC on the basis that they will be making a claim for NICs Employment Allowance: they can only do this when they have made a successful claim on an EPS. Where the Employment Allowance has been successfully claimed, ETMP will automatically allocate the allowance.

The Employment Allowance is held on account to be used against Class 1 employer NICs amounts as reported on a FPS or Earlier Year Update (Note: This does, not apply for years prior to 2014-15, so Employment Allowance cannot be offset against an EYU for 2013-14 or earlier). If the employer fails to submit a FPS and a specified charge is raised there will be no entitlement to the Employment Allowance for that tax period. However when the employer submits their next FPS, they will be credited with the Employment Allowance up to the difference between the value of the year to date Class 1 employer NICs figure on the latest and last FPS, providing the Employment Allowance limit has not already been reached.