The government has launched its National Insurance Contribution holiday starting on the September 6 2010.
Under the 3 year scheme eligible new businesses will not have to pay the first £5,000 of Class 1 Employer NICs for each of the first 10 employees hired in the first 12 months of business, saving up to £50,000.
The scheme is open to new businesses set up on or after June 22 2010 and will run until September 5 2013.
Once the £5,000 cap is reached the holiday will end for that employee and Class 1 NIC will apply as normal. Any unused relief i.e. if the employee leaves, is not transferable. The relief applies only to Class 1 contributions - not to Class 1A or Class 1B.
The regions which will benefit will include Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands and the South West.
However, businesses in the following regions are excluded:
Greater London South East Region (Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey, West Sussex, Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham) Eastern Region (Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk, Suffolk, Luton, Peterborough, Southend-on-Sea and Thurrock).
Most staff will be included but there will be some specific exclusion, for example employees operating under companies caught by the IR35 rules. Restrictions also apply to subsidiary business, businesses in association and managed service companies.
Relief is not compulsory and businesses will need to apply for the holiday. If you have not applied and been accepted, you will be required to pay as normal. Business can apply at www.businesslink.gov.uk/nicsholiday.
NOTE: The legislation is not expected to receive Royal Assent until early 2011 and has not been formally accepted. Therefore, if the Coalition government falls apart and the NIC Holiday is never implemented, any relief already obtained will be repayable. Other exclusions and restrictions apply.
The information contained in this article is for general information only. Professional advice is highly recommended before taking action.
This article was written for Smarta by Jeffreys Henry LLP, a leading firm of Accountants in London. For more information visit www.jeffreyshenry.com.
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