Increase to Employers National Insurance Allowance
The Employment Allowance is increasing from £2,000 to £3,000 on the 6th April 2016. This is good news for employers, but bad news if you’re the only employee in a company, and also the director, as your company will no longer be eligible for the NICs Employment Allowance.
This means that if as a sole director you pay yourself £11,000 per year to make use of the personal allowance, then the company will pay just under £400 per year in Employer’s National Insurance.
This is in addition to the changes to dividend tax that take effect on the 6th April 2016, which means it is crucial to discuss your personal tax planning with your accountant.
HMRC is currently consulting on the draft legislation for this change which will mean that the £3,000 allowance will not be available to offset against the employers’ NIC liability of such companies.