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HMRC internal manual

National Insurance Manual

From
HM Revenue & Customs
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Employment Allowance: Who can’t claim the Employment Allowance? Claims made through connected businesses or charities

National Insurance Contributions Act 2014 - Section 3

If two or more companies are connected with one another, or two or more charities are connected with one another, then only one of those companies/charities may claim the Employment Allowance and they must decide which company/charity claims the allowance.

If a business controls a charity, they are not considered to be connected for the purpose of claiming the Employment Allowance. Therefore, both the business and the charity can separately claim the Employment Allowance if they each employ persons and both incur employers secondary Class 1 NICS liabilities as a result.

However, the same does not apply if a charity controls a trading business, in which case both entities are considered to be connected for the purpose of claiming the Employment Allowance.

For this purpose:-

  • “Company” has the same meaning given by section 1121(1) of the Corporation tax Act 2010 (meaning of “company”) and includes a Limited Liability Partnership.

-  “Charity” has the same meaning as in the Small Charitable Donations Act 2012 (see sction 18(1) of that Act, subjet to paragraph 8(5) of Schedule 1 of the National Insurance Act 2014.

See also NIM06590 and NIM06620.