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Government confirms launch of NIC holiday scheme. Pearson May News Update - Monday 6 September
- Pre-Budget Report to be 'dropped'
- Government confirms launch of NIC holiday scheme
- PAYE errors mean billions in under- and overpaid tax
Government confirms launch of NIC holiday scheme
The government has announced the introduction of its national insurance contribution holiday for start-up firms in certain areas of the UK.
The scheme, which was first outlined by the Chancellor in the June Budget, takes effect as from 6 September.
Under the three-year scheme, eligible new businesses will be able to take a 'holiday' for each of the first 10 employees they hire in their first year of business. Each holiday will last for the first 52 weeks the employee is in their post (providing these weeks fall within the three-year holiday period).
New businesses that participate in the scheme, which is designed to help fledgling firms in regions that are economically hard pressed, will not have to pay the first £5,000 of class 1 employer NICs due in the first twelve months of business, saving up to £50,000 in tax of ten employees are included.
The scheme is open to new businesses set up on or after 22 June 2010 and will run until 5 September 2013.
The countries and regions which will benefit are 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, firms based in Greater London, the South East of England and the Eastern regions will be exempt from the relief.
David Gauke, the Treasury Secretary, said: "We need to rebalance our economy, which has become over reliant on public spending and jobs provided by the public sector.
"The NICs holiday for new businesses, in addition to cuts in corporation tax, will help provide a valuable boost to start up businesses, and help foster the private sector led recovery that will drive growth in the UK over the coming years."
Employers will be able to benefit from the holiday deductions each time they are due to make monthly or quarterly payments to HM Revenue and Customs.
Most kinds of new employers will be eligible for the holiday, provided they meet certain criteria, and most employees will also qualify, although there are some exceptions such as workers engaged through managed service companies.
A small number of businesses will be required to use a paper application form.
Any new business wishing to find out if they are eligible for the holiday and wanting more details should visit www.businesslink.gov.uk/nicsholiday
Firms can submit their applications as set out in the guidance notes.
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