Employment Allowance - £2000 off NIC's?

[Martin at NixonWilliams]

I should think that it means that if you are inside IR35, the exemption will not apply at all. Remember that the deemed payment is calculated on all your income, "in the blind" so to speak, regardless of how your remuneration is actually paid.

This is also our understanding.

I am not exactly sure why it is not allowed, perhaps because an IR35 contract has other perks such as the 5% allowance, FRS etc..

[Zero Liability]

Well it would go some way to reducing the costs of IR35 a little if you were deemed to be caught, so I hope so as well. They are effectively saying you are a disguised employee of the end client but still go after your ltd for the employer's NICs, because the end client would probably be much harder to extract them from, far more so than your average contractor. It's the equivalent of having their cake and eating it, too.

[expat]

Just to get how this will apply re IR35, is the only portion which it does not apply the deemed salary payment, i.e., the dividends which are being treated as salary? As presumably the £10,000 was paid as salary and the £2,000 exemption applied to it.

I should think that it means that if you are inside IR35, the exemption will not apply at all. Remember that the deemed payment is calculated on all your income, "in the blind" so to speak, regardless of how your remuneration is actually paid.

The deemed payment calculation may only have a material impact on that part of your remuneration that is not salary, but it is calculated on the whole lot, not just on non-salary. So even if you act nice and pay ALL your income as salary, you still won't get a penny of that exemption. Remember, it's for small businesses and you're not a business.

I hope to be corrected (unusually).

[TheCyclingProgrammer]

Just to get how this will apply re IR35, is the only portion which it does not apply the deemed salary payment, i.e., the dividends which are being treated as salary? As presumably the £10,000 was paid as salary and the £2,000 exemption applied to it.

That's my understanding too. The guidance specifically refers to deemed payments, so I don't see why the allowance wouldn't apply to your normal salary, whether it's £10k or something market rate.

[Zero Liability]

Just to get how this will apply re IR35, is the only portion which it does not apply the deemed salary payment, i.e., the dividends which are being treated as salary? As presumably the £10,000 was paid as salary and the £2,000 exemption applied to it.

[Martin at NixonWilliams]

I'm no tax expert but looks like from April 2014 micro businesses will also gain £2k off employer NI contributions.

Nice touch.

It is a good incentive, but not everybody is entitled as those caught by IR35 or providing services in the public sector (excluding IT) will not be eligible. The link below provides the details, there is also a long thread in accounting / legal on this

https://www.gov.uk/government/upload...A_Guidance.pdf

[stek]

KUATB

Old news......

[silverlight1]

I'm no tax expert but looks like from April 2014 micro businesses will also gain £2k off employer NI contributions.

Nice touch.