Employment Allowance Reminder

employee allowance

The Employment Allowance has been with us for a few years, so it is perhaps now worth revisiting to ensure you are claiming on the correct basis. Remember you can make a backdated claim to cover the years from 2015/16.

The Employment Allowance is currently worth £3,000 as a flat rate deduction against the overall amount of employer’s NIC that is paid in respect of employees. However, there are some exclusions which are covered below. Moving forward, the 2018 Budget announced that from April 2020 this allowance will only be available to small businesses. HMRC defines a small business, for these purposes, as one whose total NIC liability is less than £100,000 in the previous year. We expect to see legislation later in the year with further details.

The current exclusions are as follows:

  • Where two or more companies are connected; such as one company being under the control of another company or two companies being under common control (that is the shares in both companies being held by the same individuals), the Employment Allowance is available but it can only be claimed by one of the companies as decided by them.

The other exclusions relate to the types of business and as such the allowance will not be available where:

  • The employer is a public authority e.g. a town council
  • The employer carries out functions that are wholly or mainly of a public nature
  • NHS, GP services
  • The employer employees someone for personal, household or domestic work, such as a nanny, au pair, chauffeur or gardener. However, the allowance can be claimed in respect of domestic care and support employees, for example, a carer.
  • There is only one employee and he is also a director of the company. Steps can however be taken in this particular situation if an additional employee is taken on board and either one is paid above the secondary NI threshold

In summary, if you believe you may be entitled to the Employment Allowance but have not yet made a claim, you can make a backdated claim to cover years from 2015/16. Please do not hesitate to get in touch with the DRG Chartered Accountants tax team, if you want to discuss this further.

DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.



Back to Blog

Donald Reid Group
18a King Street, Maidenhead, Berkshire SL6 1EF | T: 01628 760 000 | E: info@donaldreid.co.uk

"My company has used DRG for a number of years. They are proactive and efficient with all aspects of their work. They keep on top of our tax and accounting requirements, and help with the development of our business strategy.

We view DRG as a key supplier and crucially a partner and would highly recommend the firm – in particular to other fast growing businesses."

David Folkman, Director

"I’ve worked with a number of accountants over the years and have never found another company who offers the same level of care, support and professionalism. They’re always on hand to offer advice and guidance, above and beyond the service that I pay for. I would recommend them wholeheartedly."

Joe Hill, Director

"Very supportive and friendly company from day one."

Outdoor Academy

"I have always worked as an employee so when I decided to set up my own business, I did not know where to start. DRG took the time to explain how working as a sole trader would be more beneficial to me setting up a limited company (which I had always thought was a requirement for running a business). They gave me practical advice on the records I need to keep as well as general guidance on setting up my business and helped me claim a large tax refund after my first year of trading."

Sole Trader

"I have been a client through a number of different ventures with DRG since 2007. They have proved the benefits of a local firm with Big 4 experience in providing sound business and tax advice by being accessible, having in-depth knowledge of my business and able to form good working relationships at different levels with me and my staff. We also enjoy the benefit of their excellent accountancy and payroll services. I couldn’t recommend them more highly."

Paul Dunn-Sims, Halcyon Home Care

"I have been extremely impressed with the service level and attention to my business."

Sherwood Event Services

"DRG provide excellent services to Extrinsica Global that enable us to focus on our priority – growing the business."

Extrinsica Global

"A professional service at a competitive rate. Perfect for small businesses."

Design & Technical Management

"We have used DRG since our incorporation. They have supported our development providing sound business advice on top of our accounting requirements.

They are proactive and helpful in responding to queries and I would recommend them to any prospective client."

Rob Farrow, Alchemy Fireworks Ltd

"Daniel and his team at DRG provide a friendly service and are always able to explain issues in clear terms."

Kensington Communication Consultants

"An excellent service, good advice – we would recommend."

Burnham Garage