Employment Allownce / NI

[diesel]

My accountant asked me if I wish to be part of the https://www.gov.uk/claim-employment-allowance scheme to save on NI payment each.

They estimate a saving of £160 pa.

Is it worth it for 1 man single LTD Co or just more hassle? welcome any views as my accountant is up to speed with tax/accountancy laws but not familiar if this may impact my 1 man Ltd Co set up/status.

before anyone says I should change account - to be honest had no real need for this.

[TheCyclingProgrammer]

Why wouldn't you do it? No brained.

[jamesbrown]

I think you're asking whether this is any hassle for you. The answer is no, your accountant will handle it for you. This has no impact on the "status" of your company (whatever that may mean). Certain eligibility criteria apply (primarily, the ineligibility of public sector work), and your accountant should confirm that these criteria are met.

[SueEllen]

I think you're asking whether this is any hassle for you. The answer is no, your accountant will handle it for you. This has no impact on the "status" of your company (whatever that may mean). Certain eligibility criteria apply (primarily, the ineligibility of public sector work), and your accountant should confirm that these criteria are met.

The guidance PDF (here) explaining the change says

You do not carry out a function of a public nature, if you are:

• providing security and cleaning services for a public building, such as government or local council offices
• supplying IT services for a government department or local council

[Jessica@WhiteFieldTax]

It's very unlikely to have any negative effect in your set up, so it's probably safe, and easy, to yes to your accountant.

[jamesbrown]

The guidance PDF (here) explaining the change says:

You do not carry out a function of a public nature, if you are:

• providing security and cleaning services for a public building, such as government or local council offices
• supplying IT services for a government department or local council

Indeed. Although it's a reasonable assumption that the OP works in IT, not everyone here does (I don't, for example), so it's better that they check with their accountant regarding eligibility.

[Louisa@InTouch]

You are saving money, so as said by TheCyclingProgrammer, it's a no brainer!

If you are eligible for the scheme, this will save you paying any employers NI up to £2,000. Even with a small salary, this is better than nothing.

Also, if you wanted to increase your salary for the year, you could earn up to £22,400 without paying any employers NI. But bear in mind this would mean further income tax and employees NI due.

But as long as your accountant has made the claim, you are eligible then it's no hassle for you. Instead you are making some tax savings!

[Maslins]

I personally think it is a bit of hassle. Not the ticking of the box to claim it, but the fact that to get any benefit from it you'd need to be suffering, and paying over NICs to HMRC.

So to my mind there's two main choices:
1) pay £663/month. This is slightly less tax efficient (assuming company qualifies for employment allowance and there aren't other staff that would use it up), but it keeps things simple, as there'll be no deductions at all in any month in the tax year, so net pay = gross pay.
2) pay £833/month. Employment allowance means you won't suffer employer's NICs (again subject to the caveats above), but you will still suffer employee's NICs. If you're a director, this tends to mean no impact in months 1-9 or so, but the last few months the net pay will be lower than gross pay, with some NICs payable to HMRC.

The £833 saves a bit of tax overall, but the client needs to make payments to HMRC. This isn't difficult of course...but if you're the kind of person who struggles keeping on top of things as it is, it's one extra tax to keep track of that you could completely avoid by opting for £663. I imagine that's what the accountant meant by hassle.

[Martin at NixonWilliams]

The £833 saves a bit of tax overall, but the client needs to make payments to HMRC. This isn't difficult of course...but if you're the kind of person who struggles keeping on top of things as it is, it's one extra tax to keep track of that you could completely avoid by opting for £663. I imagine that's what the accountant meant by hassle.

This is a good point but it is worth noting that a director would only need to make a payment in the final quarter.

[jamesbrown]

This is a good point but it is worth noting that a director would only need to make a payment in the final quarter.

Indeed, that's how I have things set-up. I take Maslins' point, but I don't find it to be any hassle in practice.