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Can they claim the employment allowance?

Two directors one wants to resign to claim allowance.

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We have a client where both are currently directors and they want to claim the employment alloawance for an annual payroll. One director is not going to be paid above the secondary threshold and to try to access the allowance that director wants to resign just so they can get the employment allowance. I don't think it's on and my payroll person is jumping up and down saying it's not. How do you think HMRC will react to this. We only have 10 days left in the month!!

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21st Mar 2019 14:39

So you're going to move from one situation where you can't claim EA to another situation where you can't claim EA ?

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By 0098087
to lionofludesch
21st Mar 2019 14:50

Well that's what I thought!! Suddenly resigning as a director for the last month doesn't make them eligible. Just asking for confirmation that we are right.

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to 0098087
21st Mar 2019 15:06

Jaysus ! ©

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21st Mar 2019 15:14

The employment allowance isn't available with two directors, one of whom is above the threshold and one below. It's also not available with one director and one employee when the employee is below the threshold, so resigning does nothing.

They could pay themselves enough to get above the threshold, then they don't need to resign as director and can claim the EA for the year, I think.

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By 0098087
to Duggimon
21st Mar 2019 15:30

The new found employee after resigning directorship within the next couple of days would be but he was a director for 11 months and 21 days!!!! We know the first scenario doesn't fly.

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By Death
to Duggimon
04th Apr 2019 08:41

Interesting, I had thought that having one other employee or indeed director, earning above the secondary NIC threshold was sufficient to claim EA? So in the case of husband & wife director companies with no other employees, your understanding is that EA cannot be claimed unless BOTH have earnings above the secondary NIC threshold? Seems to contradict this recent accountingweb article? https://www.accountingweb.co.uk/tax/business-tax/who-should-claim-the-em...
No attempt at trying to be smart or start an argument, just trying to ensure that I am applying correctly in typical real life example across my client base at least!

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to Death
04th Apr 2019 08:58

Some folk think that the second employee doesn't need to pay NI but HMRC disagrees.

As far as I know, nobody's fancied taking on a test case and, in all honesty, I can't see it ever being financially worthwhile.

Personally, I'm happy to accept HMRC's interpretation and work around that.

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