Don’t forget the Employer’s Allowance has changed!



Don’t forget the Employer’s Allowance has changed!

By Stacey McVeighty | Tuesday, 14th June 2016

As previously advised the allowance available to employers to set against their employers National Insurance liability for the year has increased to £3,000 from 6 April 2016 and no action is required if you claimed the allowance for 2015/16. However from 6 April 2016 limited companies, where the director is the only employee, will no longer be entitled to claim the allowance. This also applies where the director is the only employee paid over the Secondary Threshold for Class 1 National Insurance Contributions which is £156 a week.

There is some confusion around how the legislation is to be applied and we will update you as soon as this has been updated or clarified.

However, as with most issues that involve HMRC, the guidance and legislation are contradictory and therefore there is some uncertainty surrounding the scenario when more than one employee or director earns above the Secondary Threshold, and whether the company will continue to be eligible for Employment Allowance for the whole tax year. I am sure there will be further or updated guidance later in the year and we will update you.