Employment Allowance guidance

[Drei]

this bit

Ask HMRC to:

• use any unclaimed allowance at the end of the year to pay any tax or National Insurance you owe (including VAT and Corporation Tax if you don’t owe anything on your PAYE bill)
• give you a refund after the end of the tax year if you don’t owe anything

"including VAT and Corporation Tax" How do you read that?

I read it as if you don't use it for Class 1 NI you can have £3k and use as you see fit to pay your other HMRC commitments. Could be a missed in translation issue or HMRC bonkers talk. Wondering if anyone else read it as I did

[northernladuk]

And that's only if you meet the qualifying criteria no?

[mudskipper]

I think it's fairly clear -

"If you claim late and don’t use your Employment Allowance against the Class 1 National Insurance you’ve paid"

You can't offset the Allowance against NI you haven't paid.

[Drei]

thanks mate, makes sense however their own text is confusing, stating that it "could" be used against other payments such as Corp tax etc just confuses the reader more, especially if we have no idea about the rules and read between the lines, greedy contractors no?

[mudskipper]

So in principle it is better to pay the NI and not claim then claim the £3000 against company tax?

In my case the NI would come to around £1087... seems better to pay that as per the usual then claim £3000 against Corporation Tax, I would save almost £2k

It would be great to find out as there would be a lot of contractors that could save a few £k with this especially if going for the minimal salary of let's say £8400

In my case last year I only claimed £55 as my salary and 2 other employees was just over the NI threshold... I lost £1950?

No, you will have to have paid the NI to get the relief.

[Drei]

So in principle it is better to pay the NI and not claim then claim the £3000 against company tax?

In my case the NI would come to around £1087... seems better to pay that as per the usual then claim £3000 against Corporation Tax, I would save almost £2k

It would be great to find out as there would be a lot of contractors that could save a few £k with this especially if going for the minimal salary of let's say £8400

In my case last year I only claimed £55 as my salary and 2 other employees was just over the NI threshold... I lost £1950?

[mudskipper]

When I read this from the HMRC site it sounds to me like I can used any unused EA for the Corporation Tax bill... or not claim it then use the whole £3k against Corp Tax?

I believe this is saying that if you've already paid the NI, but are late claiming the allowance, it can be offset against corp tax instead. If you haven't paid the NI, it can't.

[Drei]

When to claim

You can claim at any time in the tax year.

If you claim late and don’t use your Employment Allowance against the Class 1 National Insurance you’ve paid, you’ll have to ask HMRC to do one of the following:

• use any unclaimed allowance at the end of the year to pay any tax or National Insurance you owe (including VAT and Corporation Tax if you don’t owe anything on your PAYE bill)
• give you a refund after the end of the tax year if you don’t owe anything

You can see how much Employment Allowance you’ve used in your HMRC online account.

When I read this from the HMRC site it sounds to me like I can used any unused EA for the Corporation Tax bill... or not claim it then use the whole £3k against Corp Tax?

[WordIsBond]

So I'll have to pay the Mrs more then

Yeah, this wrong guidance may prove to be counterproductive to them.

They are pushing people to pay their spouses a salary over £8K. If someone was paying a spouse £5K (to get state pension eligibility) and they push it over £8K to get EA, they'll probably push it all the way to £11K (to take advantage of EA on the spouse's earnings as well). The net result is going to cost the Exchequer a whole lot more than the few quid that EA was costing them.

The inability to stop and think about possible unintended consequences is staggering. These people seem incapable of stopping to think about what businesses are going to do in response to their brilliant ideas.

Of course, they can run around investigating every husband-wife company that pays both spouses £11K to figure out if both are working. The yield on those investigations will never justify the cost of them, because it will be so hard to prove that a spouse didn't earn the money.

[MarkT]

Article here on the Employment Allowance

Companies tricked out of employment allowance | AccountingWEB

It seems that the guidance imposes conditions not specified in the legislation (minimum earnings for the second employee)

Do ya feel lucky, punk?

So I'll have to pay the Mrs more then

[teapot418]

Article here on the Employment Allowance

Companies tricked out of employment allowance | AccountingWEB

It seems that the guidance imposes conditions not specified in the legislation (minimum earnings for the second employee)

Do ya feel lucky, punk?