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Sage Accounting and Payroll

Employer’s Allowance for National Insurance

Posted on 29/03/2022 | in Accounting News | by

How to process the Employer’s Allowance for National Insurance. 

This continues at £5,000 for the 2022/23 Tax Year.  But there are certain changes to the rules, you need to apply again, see below for change of procedure.

The reduction in the NI you pay is reclaimed over the first few months depending on the amount of Employer’s NI you pay each month. It is deducted each month until the total of £5,000 has been recovered.

In the Payroll:

  1. In Company > Settings > there is a new button (bottom left) “Apply for EA”.   You will not get a confirmation from HMRC, you can select the button after you have applied.  HMRC will notify you if your application is refused.
  2. As usual print the monthly P32 Employer Payment Record which shows the Tax & NI payable for the month and the Employer’s Allowance.

In the Accounts:

There is no automatic inclusion of the Employer’s Allowance in the Nominal link, so it has to be processed manually.

  1. Select Nominal > Journal.   Create a new Memorised Journal to Debit the PAYE/NI Control Account in the Balance Sheet and Credit the Employer’s NI account(s) in the Profit & Loss Account.  (Note – if you have more than one you may have to calculate an approximate percentage to each account.)
  2. From the P32 Payment Record report extract the Employer’s Allowance and enter it the Memorised Journal that you have created each month until the Allowance has been totally used.



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