Employment allowances changes

 

 

The employment allowance was introduced in April 2014 by the government to reduce employer national insurance burdens for employers.  The allowance was originally worth up to £2,000, and was increased to £3,000 from 6 April 2016.  However the government announced that companies where the director is the only employee paid more than £156 per week would no
longer be able to benefit from the allowance.

 

For 2014/15 and 2015/16 single director companies had been able to set a salary at the personal allowance threshold, on which the amount of employees national insurance due (at 12%) was outweighed by the overall corporation tax saving (at 20%). 
This was due to the effect of the employment allowance.

 

Unfortunately for 2016/17 this is no longer possible for single director companies.  There is however a loophole within the new rules whereby if a company employs someone earning £157 or more per week (this could include your spouse or partner) then
the employment allowance is still available.

 

Talk to us for advise on the most tax efficient remuneration structure for your business.

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