22 April 2025
With the changes to Employment Allowance coming into place for 2025/2026 tax year, HMRC has updated guidance for employers and their agents to help determine if companies are connected.
National Insurance Contributions Act 2014 is the legislation which sets out the rulings for connected companies. Part 1 of Schedule 1 sets out the basic rules of determining if companies are connected:
“(1) Two companies are “connected” with one another if—
(a) one of the two has control of the other, or
(b) both are under the control of the same person or persons.”
But that’s not all, you need to consider if there is any element of:
- substantial commercial interdependence
- financial interdependence
- economic interdependence
- organisational interdependence.
The updated guidance along with the legislation, should enable you to support making an informed decision on whether two companies are connected for the purposes of claiming Employment Allowance.
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