Employment allowance: will this be taxable?

Is there anything to indicate that the employment allowance will be tax-free, like the PAYE online filing incentives a few years ago? Otherwise it is really an employment allowance of £1600 or less, depending on the tax rate of the employer, despite the Prime Ministerial press release headline 'a £2,000 a year tax cut for businesses' on 14/10/2013.
Any views on whether the accounting treatment should be to net this off employer's NI or show it as a separate income line?
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  • Further practical issue relating to directors' NI and the employment allowance.
    For a payroll where the only NI relates to directors, it would appear to be best to use the 'alternative basis' for calculating employer's NI to secure the benefit of the employment allowance during the first few months of the tax year. What then happens if circumstances dictate that by the time the adjustment to an annual basis is made, the employer's NI liability was less than the employment allowance already claimed?
    Would the 'excess' employment allowance be clawed back?
    The detailed guidance states 'the maximum award you can have in a year is the lesser of the total of your Employer Class 1 NIC and £2,000', but does not address the issue of directors' NI.

    An extreme example would be to pay £10000 salary in month 1 to a director on the alternative basis, using up £1288 of the employment allowance. Should no further salary be paid then by month 12 on an annual basis the employer's NI for the year would be only £282. Would the £1288 be deemed to have been paid and would this therefore entitle the company to a refund of £1006 overpaid NI?

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