Employment Allowance for TOGC

Do you think partnership that incorporates mid tax year would/should be entitled to claim 2nd EA?

Didn't find your answer?

Hi there,

I have checked previous threads on Employment Allowance and my question did not appear.

I have a partnership business that claimed the EA for 2023/24 and fully used the £5000 before ceasing to trade as a partnership and then incorporating on 1st August 2023. I attempted to phone the Employer helpline to ask earlier but of course they didn't even get me onto the hold queue. Anyway, does anyone know whether or not they can claim an additional £5000 now trading through the company?

Thank you very much in advance.

Chris

 

 

 

 

Replies (16)

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RLI
By lionofludesch
09th Nov 2023 13:52

Sounds like a connected business to me so I'm guessing no.

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Replying to lionofludesch:
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By Leywood
09th Nov 2023 15:39

Not voting?!!

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RLI
By lionofludesch
09th Nov 2023 15:54

[chuckle]

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Replying to lionofludesch:
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By Wanderer
09th Nov 2023 15:49

Doesn't the connected persons exclusion only apply to companies (inc LLPs) & charities:-
https://www.legislation.gov.uk/ukpga/2014/7/section/3

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By CHRISSY B123
09th Nov 2023 15:51

That's what I thought, there is no mention in the legislation of unincorporated and incorporated businesses being connected.

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By Wanderer
09th Nov 2023 15:53

There you go then!

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By rmillaree
09th Nov 2023 15:58

uninformed speculation here is very unhelpful and probably best ignored - there is detailed guidance so probably best to ignore gossip that may or may not be relevant and start from the point of view what is actually said in guidance.All i can remember is i need to look through the guiodance each time to see what it says and take it from there - probably too much for any of us to remember unless they are specialist in this area.

Note it could be guidance i have linked doesnt have the answer but there will be some coments in tat guidance that are teh best starting points for tackling the question.

Some things you may be able to "guess it" - with ers allowance that is often not the case.

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By Wanderer
09th Nov 2023 16:04

Sorry are you suggesting that I am making uninformed speculation????

Also whilst appreciating that I also referenced the exact same guidance as you did, at the exact same time, I also, prior to that, referenced the actual legislation rather than HMRC's dumb downed substitute.

My start point is the legislation, not the guidance, which appears to be yours.

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Replying to Wanderer:
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By rmillaree
09th Nov 2023 16:45

Sorry are you suggesting that I am making uninformed speculation????

Nope i am aware you werent - sorry if it came across as such.

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By rmillaree
09th Nov 2023 15:52

why not start by reading the specific guidance - this is not an area you want to be making presumptions on !!

https://www.gov.uk/government/publications/employment-allowance-more-det...

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By Wanderer
09th Nov 2023 15:52

The rules relating to connected companies do not apply to sole traders, partnerships or single companies.

https://www.gov.uk/government/publications/employment-allowance-more-det...

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By taxdigital
10th Nov 2023 08:53

s.2(5), (6), (7) and (8) of the Act

Transfers of businesses

(5)Subsection (6) applies if a business, or a part of a business, is transferred to a person (“P”) in a tax year.

(6)Liabilities to pay secondary Class 1 contributions incurred by P in the tax year are “excluded liabilities” if they are incurred in respect of an employed earner who is employed (wholly or partly) for purposes connected with the transferred business or part.

(7)For the purposes of subsection (5) a business, or a part of a business, is transferred to P in a tax year if, in the tax year—
(a)another person (“Q”) is carrying on the business or part, and (b)in consequence of arrangements involving P and Q, P begins to carry on the business or part on or following Q ceasing to do so.

(8)In subsection (7)(b) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

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By Wanderer
10th Nov 2023 09:17

Well done! I was concentrating on the connected parsons point made by Lion & didn't read that earlier part of the legislation.

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By rmillaree
10th Nov 2023 11:20

this whole area is a minefield (apologies again for my poorly worded post yesterday)

i wasnt going to add anything here as i dont have any answers - i got as far as reading the following bit in the associated guidance and i ended up scratching my head and giving up (in my defence the pub was calling last night) - does the following make sense to anyone?

11. Change of business ownership before full £5,000 Employment Allowance is used
If a business that is claiming the Employment Allowance changes ownership, then that existing claim for the allowance will end when the transfer of ownership occurs.

The new owner of the business will be able to make a claim for the full £5,000 allowance in their own right. But this can only be set against the secondary Class 1 NICs liabilities arising before the transfer of ownership.

You cannot transfer any balance of unused allowance between the current and former owners of the business.

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Replying to rmillaree:
RLI
By lionofludesch
10th Nov 2023 11:35

rmillaree wrote:

this whole area is a minefield (apologies again for my poorly worded post yesterday)

i wasnt going to add anything here as i dont have any answers - i got as far as reading the following bit in the associated guidance and i ended up scratching my head and giving up (in my defence the pub was calling last night) - does the following make sense to anyone?

11. Change of business ownership before full £5,000 Employment Allowance is used
If a business that is claiming the Employment Allowance changes ownership, then that existing claim for the allowance will end when the transfer of ownership occurs.

The new owner of the business will be able to make a claim for the full £5,000 allowance in their own right. But this can only be set against the secondary Class 1 NICs liabilities arising before the transfer of ownership.

You cannot transfer any balance of unused allowance between the current and former owners of the business.

No. I'm thinking that the word "before" should read "after".

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Replying to lionofludesch:
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By rmillaree
10th Nov 2023 12:33

quite scary if that is then case.

all i can remember is that last time i lokoed at this area even after i spoke to croner i went away thinking the whole communcation of what happens where and when etc is unduly messy - my case might have been subtly different though peraps the answer here is straightforward?

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Replying to lionofludesch:
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By rmillaree
10th Nov 2023 12:33

quite scary if that is then case.

all i can remember is that last time i lokoed at this area even after i spoke to croner i went away thinking the whole communcation of what happens where and when etc is unduly messy - my case might have been subtly different though peraps the answer here is straightforward?

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