The Employment Allowance that enables employers to reduce their NI bill by £2,000 is being extended from 6 April 2016 to £3,000.
However, HM Revenue & Customs (HMRC) has advised that single-director companies will be excluded. The news follows a technical consultation that closed on 3 January 2016.
An extract, indicating the adjustment, was published on the Chartered Institute of Payroll Professionals’ website and is shown below:
From 6 April 2016, single-director companies will be excluded from the National Insurance Contributions Employment Allowance.
A technical consultation on companies excluded from the NICs Employment Allowance has been published to seek comment on the draft secondary legislation to implement the new exclusion. The consultation will run until 3 January 2016.
The purpose of the regulations is to focus the Employment Allowance on those businesses which support employment. To achieve this, the measure will exclude limited companies where the director is the sole employee from April 2016.
As HM Treasury and HMRC have UK-wide responsibility for NICs policy, the regulations will apply in England, Wales, Scotland, and Northern Ireland.
The employment allowance for the tax year 2016/17 will be £3,000.
Guidance on changes to eligibility for the Employment Allowance will be made available on GOV.UK in March 2016.