Employment allowance regulations

The Employment Allowance (Increase of Maximum Amount) Regulations, SI 2016/63, come into force on 6 April 2016 and increase the amount of the employment allowance, which employers can deduct from their payments of secondary class 1 NIC, from £2,000 to £3,000 with effect from that date.

Additionally, following a recent HMRC consultation, The Employment Allowance (Excluded Companies) Regulations, SI 2016/Draft, specify that companies with only a single employee, who is also a director of the company, cannot qualify for the employment allowance against employer’s NIC from 6 April 2016. The CIOT has warned that a bid to exclude one-person businesses from claiming the NIC employment allowance will be ‘too easy to dodge’. CIOT tax policy director John Cullinane said: ‘It will simply have the effect of penalising single director-employee limited companies that are unable to appoint another person as director or employee in order to claim employment allowance. The exclusion is also open to abuse, in that making a single payment after the director has resigned would seem to enable the company to escape the exclusion and hence qualify for employment allowance.’