Employment allowance taxable?

Employment allowance taxable?

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Is the £2,000 employment allowance taxable?  I have not seen or heard anything either way.

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By Jeffre
17th Mar 2014 09:48

What do you mean

You only receive the allowance if you are paying NIC so logic means that the expense is reduced therefore TAXABLE???

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By johngroganjga
17th Mar 2014 10:45

It is a reduction in the amount of employer's NI payable, which in normal circumstances is an allowable tax deduction.  So if you like, all things being equal the taxable profits of businesses will increase by the amount of the reduction in their employer's NI payments, and so their tax liabilities will increase accordingly.

But that is an unusual way of looking at it.  Did you think it might be the case that businesses could claim tax deductions for expenditure that they had not incurred?  If you had a company that ceased to be liable to pay its PR company's fees because it took a decision to dispense with their services would you ask whether it would be able to continue to deduct notional PR agents' fees in the calculation of its tax liability?

 

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By mikeyban
17th Mar 2014 11:03

Yes I understand your thinking... It's taxable

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By Vaughan Blake1
17th Mar 2014 12:56

Thanks for that

Logic says it would be taxable, but tax isn't always logical, so just checking!

I seem to remember being given an incentive to file PAYE online that I deducted against PAYE payments, now I am being given a £2,000 NIC incentive to employ more people, that I can deduct against my er's NIC....

John, I think your example of PR fees and generally claiming deductions for expenditure not incurred is somewhat irrelevant here! 

 

 

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By mhtax
17th Mar 2014 13:41

Not a good comparison

The PAYE incentive was a payment receivable - not necessarily deducted from liability as if you had none they paid you - which was specifically granted as a non-taxable receipt.

John's point is correct - your expenses are reduced permanently  - but only up to the level of your employer's liability so it cannot be looked on as income.

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