Eligibility for Employment Allowance

Tax Question

My client was the sole director of a limited company which provides training services to the NHS. This is the only business the company undertakes. The workload has grown to the extent that the company has taken on two employees to deliver part of the training. I know as a sole director company it was not possible to claim the employment allowance reduction in class 1 National Insurance of £3,000 per annum. Now that this is not a sole director company can the employment allowance be claimed?

Tax Answer

I am afraid not. There are certain functions which debar an employer from claiming the allowance. These are discussed in HMRC’s publication “Eligibility for Employment Allowance: further employment guidance” available on the gov.uk website.

One of the exclusions listed is where the activity is either wholly or mainly of a public nature. This essentially means that if you are doing more than 50% of your work in the public sector the nature of the work would prevent a claim to employment allowance.

Clearly this includes the NHS. The only exclusions from the rule relate to the provision of security or cleaning services for public buildings and supplying IT services to a public department.

So, in the circumstances you describe, the employment will not due available.