Another change that’s being implemented as part of the proposed legislative reform is that of the Employment Allowance for National Insurance Contributions.
The current £3,000 allowance will stand, but with a few differences in the associated requirement around the provision of supporting information.
Firstly, under the new legislation – employers will no longer be required to submit information about other state aid they currently receive. Secondly – the new change coming into effect will mean that in future should a company wish to claim their employment allowance, it will have to be done on a year-by-year basis instead of the current setup which allows businesses to carry it forward from one tax year to the following.
The intended beneficiary of the changes remains smaller businesses, offering a crucial tax break on Class 2 NICs.
The larger businesses that incur employer secondary Class 1 NIC liabilities of over £100,000 in the tax year prior to the year of claim, inclusive of employers who are legally connected to other businesses sitting over the same £100,000 threshold.
In order to assess the claim of the employer allowance for those businesses connected to others, they will be required to cumulate all of their secondary Class 1 NIC liabilities incurred from the previous tax year, which means if the total sum meets or exceeds the £100,000 line – neither business will be eligible to claim.