Employer's NI Allowance scheme - closes 6th August 2016

[7specialgems]

As part of the summer budget on 8th July it was announced that the Employer's NI scheme will increase from £2,000 to £3,000 however that single employee businesses will no longer qualify.

The increase is enacted from 6th April 2016.

Is this also true for the MyCo eligibility?

[Kenny@MyAccountantFriend]

We are waiting for clarification on how it will apply as it could simply be avoided by paying a partner via the company or adding a second director.

At this time we do not know the fine print to say either way.

Based on the details available it appears a single person company will not be able to claim the allowance next year.

[expat]

Employer Bulletin: August 2015

from April 2016 incorporated companies where the sole employee is the director will now be excluded from receiving this allowance.

To me that implies that if you are the sole employee but not the director, the allowance will still be available. If HMRC are right in what they say.

[LisaContractorUmbrella]

According to this https://www.gov.uk/claim-employment-allowance you can't claim if you're inside IR35 and then here https://www.gov.uk/government/upload...eligibilty.pdf it says

"Personal and Managed Service Companies
You cannot claim the allowance for any deemed payments of employment
income. However, you can claim the Employment Allowance against the
employers Class 1 NICs arising on the earnings paid to your employees"

So I would assume that if you are the sole employee of your company it won't be possible to claim it

[pr1]

if we assume they're not complete idiots (a stretch, I'll admit, but let's assume just for now) then they'll write it up with sufficient loop hole-closing so that a contractor paying themself a relatively low salary can't claim it (regardless of "employing" their husband/wife, children, dog, grandmother)

[WordIsBond]

if we assume they're not complete idiots (a stretch, I'll admit, but let's assume just for now) then they'll write it up with sufficient loop hole-closing so that a contractor paying themself a relatively low salary can't claim it (regardless of "employing" their husband/wife, children, dog, grandmother)

Shhh. Just in case they are complete idiots, let's not talk about that.

Otherwise, the idiots will probably write it so I can't use it on my kids' salaries even though my kids are bringing in contracting revenue.

[unixman]

According to this https://www.gov.uk/claim-employment-allowance you can't claim if you're inside IR35 and then here https://www.gov.uk/government/upload...eligibilty.pdf it says

"Personal and Managed Service Companies
You cannot claim the allowance for any deemed payments of employment
income. However, you can claim the Employment Allowance against the
employers Class 1 NICs arising on the earnings paid to your employees"

Off topic but HMRC habitually refers to "managed service companies", a novel concept it has introduced in order to advance a wooly argument IMO. They are limited companies, period. We should refer to them as such. And so should accountants and agents in my view. Is there any definition in law of a "managed service company"?

All of my paperwork, articles of association, official company documents, and statutory accounts, refer to my company as a "limited company". There is no mention whatever of "managed service company". Neither is "managed service company" mentioned in any contract, or in letters sent or received, or orally either by me or my clients.

[WordIsBond]

Off topic but HMRC habitually refers to "managed service companies", a novel concept it has introduced in order to advance a wooly argument IMO.

MSCs are defined in legislation. Roughly and greatly oversimplifying, it is a bunch of contractors joining together to form a single company, generally each holding a different class of shares, so they can all be paid mostly in dividends, which used to have significant tax advantages until they legislated against it.

If you have a limited company with just you running it, you certainly aren't an MSC.

[unixman]

Ah yes, sorry. I remember when MSCs were outlawed, come to think of it.

The term I am ranting against is "personal service company".

[jpdw]

Ah yes, sorry. I remember when MSCs were outlawed, come to think of it.

The term I am ranting against is "personal service company".

Isn't "personal services company" similarly ambiguously defined? And, just like yours, MyCo's official docs also seem to call it a limited company (unless/until IPSE score an own goal and someone arbitrarily reclasses OurCo's as FLC etc).

if we assume they're not complete idiots (a stretch, I'll admit, but let's assume just for now) then they'll write it up with sufficient loop hole-closing so that a contractor paying themself a relatively low salary can't claim it (regardless of "employing" their husband/wife, children, dog, grandmother)

Ruling out where husbands/wife (etc) are employed would discriminate where the spouse (etc) is actually a fee earner rather than just a business cost. Quickly it's be another myriad of loop-holes to close loop-holes to close loop-holes. Only winner (per usual) will be the darned big-4 that whisper the policies into ministers ears, then earn vaster fees than we can imagine advising people on avoidance...