There are 2 steps involved in setting up and claiming the Employment Allowance. Both steps must be completed in full, see below.
Step 1: Indicate the Claim in the Chart of Setup.
If you are eligible to claim the Employment Allowance simply go to Chart of Setup from the Employer / Setup drop down menu and click the Employment Allowance Indicator link under the Payrun Customisation section. Now click on the Edit button. Set whether you are eligible for Employment Allowance Indicator by selecting the “Yes / No” option from the drop down on this screen. Click the Save button to save the changes you made.
Road Map - Edit Employment Allowance Indicator Setup
Employer/Setup -> Chart of Setup -> Payrun Customisation -> Employment Allowance Indicator Link -> Edit button -> Select "Yes" -> Click on Save.
( 'Employer/Setup' is the button positioned in the tasking zone menu at the top. It is the first button from the left)
Step 2: Inform HMRC that your claim has started.
You must inform HMRC that you are claiming the Employer Allowance by e-filing an Employer Payment Summary (EPS). You will have to submit a once only 'Making a Reclaim' EPS after you have set the Employment Allowance Indicator to "YES". If you do not send an EPS HMRC will think you are underpaying and will raise a query. You do not need to send HMRC an EPS every month unless you have other items to recover from HMRC.
Road Map - To E-file the EPS to HMRC.
E-Filing RTI -> E-file RTI FPS, EPS, NVR, EYU -> EPS (Employer Payment Summary) link -> 'Making a Reclaim'
( 'E-Filing RTI' is the button positioned in the tasking zone menu at the top. It is the third button from the left)
Please note: In the 'Making a Reclaim' EPS, the Employment Allowance Indicator will be shown set to 'Yes' on the second page i.e. after you have entered any CIS Deductions Suffered, if appropriate, and then clicked on the Click to Continue button. The EPS YTD Data will be pre-filled by the system as appropriate, you do not need to enter anywhere on the EPS the amount of Employment Allowance you are claiming. Do not enter £4,000. The EPS is simply to inform HMRC that you will be claiming the Allowance, not how much.