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However, as this is primarily a measure to encourage employment, it will be suspended for sole directors.
The Red Book which contains the detail following the Chancellor's speech, said (1.198): To ensure that the NICs Employment Allowance is focused on businesses and charities that support employment, from April 2016, companies where the director is the sole employee will no longer be able to claim the Employment Allowance."
ATT - Fair move
Natalie Miller, President of the Association of Taxation Technicians, said: “The Government’s commitment to increasing and extending this allowance is welcome news and will provide a boost to businesses seeking to alleviate what can be a significant cost involved when taking on an employee. This is a positive contribution to the UK’s economic recovery.
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“Despite these concerns, this announcement proves that HMRC and the Government are still keen to develop the positive outcomes that arise from this allowance.
“The increase to the allowance will also assist employers when the new National Living Wage becomes compulsory as this would be likely to increase employers’ costs otherwise. The increase in the Employment Allowance ought to now make the situation tax neutral and not deter any employer from recruiting the same amount of staff as under the current National Minimum Wage.”
FreeAgent - No good news
Ed Molyneux, CEO and co-founder of online accounting software provider FreeAgent said: “This Budget is a mixed bag for small businesses. On the one hand, there’s good news for growing business taking on staff as they’ll benefit from a higher Employment Allowance - but that will be hugely tempered by the introduction of a much higher Living Wage that they will have to pay those staff.
“However, there's no good news for small businesses who aren’t looking to take on staff. Directors of limited companies who are the only employee will no longer benefit from the Employment Allowance, which will be a big blow to them, and there are no new incentives or support for entrepreneurs launching a solo startup business."
For further information
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Susie Hughes © Shout99 2015
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