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Who can or cannot claim the Employment Allowance

Source: HM Revenue & Customs | | 04/12/2018

The Employment Allowance of £3,000 per year is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process.

An employer can claim less than the maximum if this will cover their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current tax year (as well as make a backdated claim for one further tax year).

The eligibility to claim the Employment Allowance was removed for limited companies with a single director and no other employees in April 2016. As the allowance was introduced as an inventive to take on staff, it was felt unfair that companies with a single director and no employees should benefit from the allowance.

There are a number of other excluded categories where employers cannot claim the Employment Allowance.

These include:

  • Persons employed for personal, household or domestic work, such as a nanny or au pair (unless they are a care or support worker);
  • a public body or business doing more than half their work in the public sector;
  • a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary.
 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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