Employment allowance changes

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TaxThe start of the 2016/2017 tax year brings with it new changes to employment allowance rules that will affect those companies where the only person on the payroll is a director.

Previously, ‘single director employee’ limited companies were eligible for employment allowance (enabling them not to pay the first £2,000 of employers national insurance). From April 2016 however all single director employee companies are no longer eligible for employment allowance.

What about two directors?

For now, if you have a second director on the payroll you will still be eligible for employment allowance should you meet the other qualifying conditions.

Rate changes

Those who are eligible for employment allowance will be happy to hear the rate has risen from £2,000 to £3,000 for the 2016/2017 tax year.

Tax planning

If you are a ‘single director employee’ limited company and need help with your tax planning for the 2016/2017 tax year, get in touch with us. We will be able to review your situation and provide tax planning ideas to help reduce the impact of not only the employment allowance changes but also the dividend tax changes that come into effect in the 2016/2017 tax year.

Bookkeeping and Accounting in Essex

Nine Ashes Bookkeeping is a local, independent bookkeeping and accounting firm which specialises in bookkeeping and accounts for small businesses. Based in Ingatestone, we have clients from across Essex and can help with a wide range of services including tax advice, bookkeeping, payroll and year end accounts production.