A letter from number 10 Downing Street

Posted by RM2 at 15:51 on 10 Apr 2014


How exciting, have I got tickets in the ballot for the National Gardens Scheme, am I being called in for a light supper?

No, I am being told about the new Employment Allowance that takes £2,000 off our employer National Insurance Contributions (NICs). It’s a great initiative for small businesses like mine and perhaps yours... except I know we probably won’t be entitled the allowance!

Have you had one of these letters (a good way to support the Post Office’s share price!)? If so there are a few points to bear in mind:

  1. It only applies for one company in a Group or one employer amongst connected companies. For example, we are part of a small Group of Companies so there is only one £2,000 available for one company in the Group – and it might not be us.
  2. It isn’t only formal Groups that are restricted to one allowance. Separate companies under the control of the same person or persons will be restricted to one allowance.
  3. If a sole trader or a partnership then a claim can be made but only against class 1 national insurance so unlikely to benefit payments to partners or sole traders, only their employees.
  4. Unfortunately you cannot claim this relief against nannies, housekeepers or other domestic help.
  5. For personal service companies, you can only use the allowance against actual payments not deemed income.

The RM2 Partnership Limited are share scheme specialists, not PAYE specialists, so we cannot to be advise you on the rules relating to the Employment Allowance. However, your usual PAYE advisers will be able to assist further.