Start-up Tax Exemption Must be Extended Nationwide, urges FSB
The exemption on employees’ National Insurance Contributions (NICs) for start-ups, announced in the emergency Budget, should be extended to new businesses in the South East and East of England, the Federation of Small Businesses (FSB) has said.
Chancellor George Osborne announced the tax break in the June Budget to encourage start-ups in regions where the private sector is not strong.
“For the next three years, anyone who sets up a new business outside London, the South East and the Eastern region will be exempt from £5,000 of employer National Insurance payments, for each of their first ten employees hired,” he said.
However, the FSB has warned that excluding the South and East from the NICs holiday for new firms would deter start-ups from setting up there, as well as preventing existing businesses from getting the support that they need to grow.
The FSB points to its latest business confidence poll which revealed that 64% of small firms in the South East are likely to be trading below capacity ? more than anywhere else in the country.
“This shows how wrong the Government is to not include this vital region, as well as the East and London, in its proposals for a National Insurance holiday for start-up businesses,”
said FSB national chairman, John Walker.
“With 600,000 public sector jobs expected to be lost, stimulating private sector job creation, especially in small firms, will be vital to rebalancing the economy.”
London-based enterprise agency Capital Enterprise’s chief executive, John Spindler, said the Government’s plan to exclude the South East sent out the “wrong message”.
“If you’re using the NICs policy to create jobs, then why should a business in a poor area of London like Tower Hamlets not have the same advantages as a new firm in Wales?” he asked. “It creates a two-tier system, when the South East and the capital also have a high density of deprived areas that would benefit from a tax cut.”
Spindler added that creating tax breaks based on geographical location would be difficult to enforce.
“It’s possible to envisage a situation where firms will register in cities like Leeds or Sheffield, but actually trade in the South East. The system cannot be policed properly.”
According to a Department for Business, Innovation and Skills spokesperson, there are currently “no plans” to extend the NICs holiday nationwide.