HM Revenue and Customs (HMRC) has reiterated the importance of understanding how the Employment Allowance applies to connected companies. This allowance, which enables eligible employers to reduce their National Insurance contributions by up to £5,000 annually, is subject to specific rules regarding companies that are linked through common ownership or control.
What Are Connected Companies?
Connected companies include those with shared ownership, such as parent companies and subsidiaries. When companies are connected, they must share the Employment Allowance, meaning the £5,000 cap applies to the entire group rather than each individual entity.
Implications for Employers
Businesses with multiple connected companies need to coordinate their claims carefully. If one company claims the full allowance, the others in the group cannot make a claim. This collaborative approach is crucial for maximizing the financial benefits available under the Employment Allowance.
Steps for Employers
- Identify Connections: Determine if your businesses are classified as connected based on ownership.
- Evaluate Eligibility: Each company should assess its eligibility for the allowance.
- Coordinate Claims: Develop a strategy for how the allowance will be claimed within the connected group.
- Seek Professional Advice: Consulting with financial advisors can help navigate the complexities of the allowance and ensure compliance with HMRC guidelines.
For more guidance, please contact Marsland Nash Payroll who can help you navigate the complexeties of the ever changing payroll and pension landscape.
