Claiming Employment Allowance

The employment allowance of £3,000 per year, is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process.

An employer can claim less than the maximum if this will cover their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current tax year (as well as make a backdated claim for one further tax year).

The eligibility to claim the employment allowance was removed for limited companies with a single director and no other employees, from April 2016. As the allowance was introduced as an inventive to take on staff, it was felt unfair that companies with a single director and no employees should benefit from the allowance.

There are a number of other excluded categories where employers cannot claim the employment allowance.

These include:

  • Persons employed for personal, household or domestic work, such as a nanny or au pair (unless they are a care or support worker);
  • A public body or business doing more than half your work in the public sector;
  • A service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary.

Posted by Cassey Nixon on

31st August 2018

Categories

  • Tax Implications for Construction Industry

    If you run a construction business and secure the services of sub-contractors, or if you are a sub-contractor, you will need to comply with a special set of tax rules known as the Construction Industry Scheme (CIS). The CIS rules determine the tax and National Insurance treatment for those working in the construction industry. Under […]

    Andrea L Richards | Accounts Navigator Associates Limited
  • What Is a Joint Venture?

    A joint venture is a commercial enterprise undertaken by two or more parties who otherwise retain their separate identities. The parties to the joint venture usually bring together different resources and areas of expertise to help fulfil a specific project. HMRC makes the point that on close examination of these associations prove to be partnerships, […]

    Andrea L Richards | Accounts Navigator Associates Limited