National Insurance Exemption Begins for Start-ups
Start-ups outside London, the South East and east of England no longer have to pay employers’ National Insurance Contributions (NICs) in their first year of trading, following the launch of a tax exemption scheme.
Announced in June’s emergency Budget, the Regional Employer NICs Holiday for New Businesses is aimed at encouraging enterprise growth in the parts of the UK which were worst hit by public sector spending cuts.
“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 the first ten employees hired,”
said Chancellor, George Osborne when the scheme was announced.
Under the three-year scheme, new businesses in all parts of the UK ? except London, the South East and east of England ? are exempt from NICs for the first ten recruits they hire in their first year of trading. The exemption will last for the first 52 weeks that the employee is in the post.
Forum of Private Business chief executive, Phil Orford, said:
“For years small business taxation has steadily increased, so this reduction in NICs for some small firms has to be welcomed.”
“However, given the significant threats to cashflow and business growth from issues such as a lack of bank finance and increasing late payments, recruitment is likely to be slow during the first 12 months for many new firms. The scheme should be available for a longer period than just the first year they are in business.”
For more information read Regional Employer NICs Holiday for New Businesses.
Detailed, full guidance (Technical Note, Draft Legislation and Explanatory Notes) is available from HMRC – Regional employer National Insurance contributions Holiday for New Businesses (PDF).