HMRC open consultation on changes to the employment allowance
HMRC open consultation on changes to the employment allowance
Tue 08 Dec 2015
Currently, the employment allowance entitles a broad range of employers to benefit from a reduction of up to £2,000 per year to their liability to employers’ NIC, with the allowance rising to £3,000 per annum from April 2016.
HMRC have opened a technical consultation on changes, to exclude companies where the director is the sole employee. These changes, announced in the Summer Budget, will take effect on 6 April 2016.
At the core of the consultation is a new exclusion from the allowance where:
- all the payments of earnings in relation to which the claimant company is the secondary contributor in that year are paid to, or for the benefit of, the same employed earner, and
- when each of those payments is made, that employed earner is a director of the company.
The consultation is open until 3 January 2016 and HMRC are seeking views on whether the proposed changes achieve their objective (to ensure that the allowance is focussed on businesses that are creating employment) and whether they produce any unintended consequences.
HMRC guidance on this change is expected after the consultation has concluded, in March 2016.
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