The following Employment Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
There has been some confusion about theinteraction between theemployment allowance and thecoronavirus job retention scheme (CJRS).
This guidance note discusses how thetwo sets of rules work together and considers thefollowing potential issues that may have arisen in practice:
claimed theemployment allowance and made reduced CJRS national insurance contributions (NIC) grant claim
claimed theemployment allowance and overclaimed CJRS NIC grant
avoiding double relief where theclaim for employment allowance is made mid-tax year
insufficient NIC liability to utilise employment allowance in therest of thetax year
Before covering theinteraction, it is worth summarising both provisions.
Under theCJRS, employers may be able to obtain a grant from theGovernment up to a limit to cover a percentage of thetotal of:
furloughed employees’ wages (up to a cap)
the associated employer secondary Class 1 NIC (up to 31 July 2020, as employers must pay these costs from 1 August 2020 onwards), and
the minimum employer automatic enrolment pension contributions (up to 31 July 2020, as employers must pay these costs from 1 August 2020 onwards)
Coronavirus Act 2020, ss 71, 76; HM Treasury Directions dated 15 April 2020, 22 May 2020, 25 June 2020
For full details of thescheme, see theCoronavirus job retention scheme (CJRS) guidance note.
From 6 April 2020 onwards, theemployment allowance is £4,000 per tax year. It is used to reduce theemployer’s secondary Class 1 NIC payment due to HMRC. It cannot be used against theemployer’s Class 1A or Class 1B NIC liability.
The employment allowance is available to most small employers, although there are conditions to prevent it from being used by ‘director-only’ companies and most domestic payrolls. Employers with a secondary Class 1 NIC in theprevious tax year of over £100,000 (measured at a group level) also do not qualify for theemployment allowance with effect from 6 April 2020. For full details of
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