From April 2020 an employer will only be entitled to claim Employment Allowance if that employer had an Employer NIC bill of less than £100,000 in the previous tax year.
The change effectively withdraws Employment Allowance for medium to large sized companies, with many employers with a gross annual wage bill of more than c.£850k affected by the change.
Given the low value of Employment Allowance, the change targets the allowance at employers who are likely to consider the relief that it gives, material.
Over 99% of micro-businesses and 93% of small businesses will still be eligible for the Allowance.
However regardless of size of company, you can’t claim the employment allowance if:
• you’re the director and the only employee paid above the Secondary Threshold • you employ someone for personal, household or domestic work (like a nanny or gardener) - unless they’re a care or support worker • you’re a public body or business doing more than half your work in the public sector (such as local councils and NHS services) - unless you’re a charity • you’re a service company working under ‘IR35 rules’ and your only income is the earnings of the intermediary (such as your personal service company, limited company or partnership).
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National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill 29 April 2019
The National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill has received its first reading in Parliament with the second reading scheduled for 30 April 2019.
The Bill provides for Class 1A national insurance contributions to be made on certain termination awards and to provide for the controller of a sporting testimonial to be the person liable to pay Class 1A national insurance contributions on payments from money raised by the testimonial.
The Bill makes provisions to amend:
• The Social Security Contributions and Benefits Act 1992 (Class 1A contributions: benefits in kind etc.)
• The Social Security Contributions and Benefits (Northern Ireland) Act 1992 (Class 1A contributions: benefits in kind etc.)
Termination Awards
The aim of the Bill is to bring about reforms that will more closely align the treatment of employer NICs (Class 1A) on termination payments in excess of £30,000 that are subject to PAYE income tax. At present some forms of termination awards are exempt from both employee and employer NICs and the first £30,000 is free from Income Tax.
This Bill will not affect:
• Employee NICs treatment of termination awards • NICs treatment of statutory redundancy pay and compensation
Income Tax changes were made in the Finance (No 2) Act 2017 which took effect from 6 April 2018.
Sporting Testimonials
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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