A UK business has two directors and both are employed by the company. One of the directors earns above the National Insurance contributions (NICs) secondary threshold via the company; the other director earns above the secondary threshold via other sources. Is the business eligible for the employment allowance, or do all earnings (from both directors) need to come from the company in question? 

Arthur replies: 

HMRC guidance in its National Insurance Manual (see NIM06545, sixth bullet point) states: ‘a limited company with two or more directors, where only one of the directors earns above the secondary threshold for paying employers secondary Class 1 NICs. The company is not eligible to claim the Employment Allowance.’ The guidance also states: ‘The company would need to incur additional secondary Class 1 NICs liabilities on employment earnings paid to at least one other employee (which can include an additional director) before that company may qualify to receive the employment allowance.’ So, it appears that only earnings from the company count for these rules.