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Benefit from employment allowance

A new employment allowance could reduce practice employer class one National Insurance contributions (NICs) by up to £2,000 each tax year.

The new employment allowance is due to be introduced from 6 April 2014.

Guidance on the new employment allowance has been published stating that businesses paying employer class one NICs on employees’ or directors’ earnings can claim the allowance.

However, there are some restrictions.

One of the key exclusions for a dental practice, according to the guidance, is if its work is wholly or mainly of a public nature.

This suggests that if more than 50% of a dental practices work is for the NHS it is not eligible.

Alan Suggett, National Association of Specialist Dental Accountants & Lawyers (NASDAL) member says: ‘So much depends on the interpretation of “50%." For instance, the majority of your working hours may be for the NHS but if only 49% of your patients are NHS then you might still be eligible.

‘Whether “50% of your work” is based on turnover, profit, time spent, number of patients or a combination of all of these factors will need to be clarified.

‘We will have to wait for the legislation for the exact definition of “wholly or mainly” and what this means for dental practices.’

Legislation for the allowance is contained in the National Insurance Contributions Bill currently before Parliament so clarification should be available soon.

Eligible dental practices can make a claim for employment allowance via its payroll software or by using HMRC’s Basic PAYE Tools.

Alan said: ‘A dental practice should ensure it keeps adequate records of why it is entitled to claim the allowance. These records should be retained for a minimum period of three years following the tax year in which it makes the claim.’

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