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Employment Allowance interaction with 2 employees

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Hi Everyone,

I hope you are all well and staying safe.

I wonder if I could ask for some guidance please regarding the Employment Allowance.

I have a client where they have one director and one employee. From what I can see of the rules, that means that they can claim the Employment Allowance.

In that case, couldn't the Director salary be up to £9,500 therefore not paying Employees NI, and claiming on the Employment Allowance for the Employers NI.

The rules say that the Employment Allowance isn't available for those companies where there is only one employee AND the one employee is a Director.

 

What are anyone's thoughts?

Thank you in advance for your time.

Replies (4)

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By SXGuy
01st Jun 2020 14:26

Yes if there's two employees and one is a director you can have the director taking 9500 and pay no ni overall. But obviously that's dependant on the 2nd employees salary and whether the EA will be used for them also and whether it will be used up in the year.

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Replying to SXGuy:
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By enoryt010
01st Jun 2020 14:38

Perfect, thank you. That's what it looked like, but as it was the first one I'd come across I wanted to check with others who may know!

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By susieq
02nd Jun 2020 10:19

The second (none director) employee has to earn at least the secondary nic threshold though to be able to claim EA I believe.

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Replying to susieq:
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By enoryt010
02nd Jun 2020 10:30

Thank you, yes, I believe so.
In this case, that's not a problem.

Thank you for your comment.

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