Employers allowance and kickstart scheme

Client looking to employ using kickstart scheme and asked to apply for employment allowance.

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Client is currently a sole director on payroll, but looking to use the kickstart scheme to employ a young member of staff. He has asked if he can then apply for employment allowence. 

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By NYB
23rd Sep 2020 10:52

He doesnt have to pay employers NIC as per below anyway. But how this is implemented there is no clear details. If he claims "employers allowance" then any directors pay will get trawled in. And this maynot be allowable.
I bet if you contact HMRC they wont have a clue. I havent beemn much help really but am interested in the answer.

Funding will cover for each job placement:

100% of the relevant National Minimum Wage for 25 hours a week
the associated employer National Insurance contributions
employer minimum automatic enrolment contributions

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Replying to NYB:
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By Spaceraiders
23rd Sep 2020 11:19

I agree, I think he wants the allowance to cover directors NI as well, and I have been busy reading up on the additional staff test for Employment Allowance.

However I have had no luck at clear details, and your right I called HMRC yesterday and I got a response of "We don't deal with that"

Thank you for replying anyway, least I know I'm on the right track.

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By Paul Crowley
23rd Sep 2020 14:08

Why is director choosing the tax inefficient method to get money from company?

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Replying to Paul Crowley:
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By Spaceraiders
23rd Sep 2020 14:31

I am not sure of the tax planning on this client, only to whether he can use employment allowance and the kickstart scheme.

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By bendybod
28th Sep 2020 10:00

Given that the Kickstart scheme also covers the Employers' NI, it would be a little incongruous to get relief for any Employers' NI twice (assuming that the employee is over 21 and attracts any NI in the first place). Depending upon their age, would they even be earning the secondary threshold at NMW?

Not having read the legislation in detail, I presume there would be something in place to say 'no' on the same basis as you couldn't claim EA with CJRS.

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By Jamie Thompson
28th Sep 2020 10:16

You are eligible to claim the employer allowance if you employ an employee over the secondary threshold (even if the rate is 0%) and that employee is not the sole director (also assuming the other criteria for EA are met).

Similar question asked before.
https://www.accountingweb.co.uk/any-answers/is-this-eligible-for-employm...

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