In April 2014 the government introduced an Employment Allowance to help small businesses create new jobs.
The allowance provides relief from paying Employers’ National Insurance contributions until it the allowance has been used up or the tax year ends.
When the scheme launched in April 2014 it benefited a large number small businesses by giving them a £2,000 allowance. The government amended the scheme from 6th April 2016 by increasing the allowance to £3,000 whilst withdrawing it for businesses where the director is the sole employee. The allowance is also not available when IR35 legislation is being operated.
For many sole director businesses, the impact of the changes from April 2016 will be small when salaries are tax efficient.