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When you can’t claim employment allowance

Source: HM Revenue & Customs | | 12/12/2017

The employment allowance of £3,000 per year is available to most businesses and charities and can be used 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 covers their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current 2017-18 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 (paid above the Secondary Threshold) and no other employees in April 2016.

Planning note

There are a number of other excluded categories where employers cannot claim the employment allowance.

This includes:

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

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