The NICs employment allowance explained

The Chancellor announced the creation of an NICs Employment Allowance in the 2013 Budget. From 6 April 2014 this new initiative will enable eligible companies to reduce their employer/secondary class 1 NICs bill by up to £2,000 a year, explains Diana Bruce.

The NICs Bill was introduced to Parliament last October to start the legal process to bring the regulations into force for April and even though it is only a few weeks before the Employment Allowance comes into effect, it is still awaiting parliamentary approval.

In the meantime the long awaited...

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Comments
memyself-eye's picture

There is never a problem so complex    2 thanks

memyself-eye | | Permalink

That politicians cannot make it make complex still. Why not just reduce employers NI percentages?

Don't answer that - I already know why. Madness, pure madness........

At least it'll help some

0098087 | | Permalink

At least it'll help some small employers pay the SSP funding that is being withdrawn. Who comes up with these nonsense ideas.

What a good idea

eddie the eagle | | Permalink

I'm sure the likes of Google and Amazon will be really pleased with the reduction in costs. Not too sure how our friends in Debt Management & Banking are going to cope; they seem to struggle to reconcile as it is. With random sums being taken from employers' NI will they cope or will businesses spend more than £2000 defending their premises from the further attentions of the bailiffs?

What is the "entitlement entity"? I look after 6 tax references of companies with different names but which are related and no-one can tell me whether I'm entitled to £2000 or £12000 ... who decides and on what basis will the decision be made. I shall claim for £12000 and what penalty will be applied if HMRC disagree? Indeed is it HMRC who are empowered to disagree; they don't seem able to tell me my entitlement.

I have read press releases extolling the simplicity of the Employment Allowance; presumably it's the same Press Office that keep telling me that RTI is working. Sack the minister responsible and let's re-establish payroll for what it is; a mechanism owned by employers to reimburse their workforce not a plaything for Government and their ridiculous schemes.

IR35

ringi | | Permalink

I am right to think that this leaves someone that is hit with IR35 £2000 better off each year?

Companies owned by common shareholders

PJWSmith | | Permalink

I have two company clients where one shareholder holds 100% of Company One and 50% of Company Two (with one other 50% shareholder), these two shareholders are also the only members of an LLP. The three businesses are totally unconnected in terms of their trade and are run independently.

Is the LLP connected to Company Two (same owners)? Are they both connected to Company One?

This is going to get messy I think.

Pharmacies

acdmccolm | | Permalink

Would an independent pharmacy qualify for the employment allowance? Or is the dispensing of drugs classed as NHS services?

jovictoria's picture

Answers from HMRC

jovictoria | | Permalink

The CIPP Policy team are currently collating questions that have been raised regarding the Employment Allowance and will post a Q & A when we have received all responses from HMRC.

IR35

pnown | | Permalink

IR35 deemed payment are excluded. No £2,000 allowance

jovictoria's picture

More detailed guidance published by HMRC

jovictoria | | Permalink

HMRC has not as yet answered our questions however this could be because they have 'quietly' updated guidance! Earlier in the month HMRC's Agent Blog published information warning that agents may receive enquiries from clients about the new Employment Allowance as they sent employers an email headed 'Get up to £2k off your NICs bill' highlighting the introduction of EA with a link to guidance. Did you or your clients happen to receive these emails?

 HMRC did say when they published their original guidance in February that they would update it - and now they have, but have managed to keep that fact rather well hidden within their Agent Blog (https://taxagents.blog.gov.uk/). Anyway the guidance contains far more detail on eligibility, claiming, connected companies and connected charities. Link to updated guidance is: https://www.gov.uk/government/publications/employment-allowance-more-det...