News In Focus
7 September 2010
NICs holiday scheme for new businesses launched
A national insurance contributions (NICs) holiday scheme has been launched to encourage new business start-ups in those parts of the UK most reliant on public sector employment.
The "Regional Employer NICs Holiday for New Businesses" offers substantial reductions in employer NICs for new businesses.
Under the three-year scheme, eligible 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 post (providing these weeks fall within the three-year holiday period).
New businesses who take advantage of the scheme will be able to save up to £50,000 in employer NICs – £5,000 per employee, up to a maximum of 10 new employees.
Who qualifies
Within the UK, the regions and countries that will benefit are the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands, the South West, Scotland, Wales and Northern Ireland.
The scheme is open to new businesses set up on or after 22 June 2010, and will run until 5 September 2013.
Launching the scheme, Exchequer Secretary to the Treasury, David Gauke, 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.”
To find out if they are eligible for the holiday, and for further information on the scheme, new businesses should visit www.businesslink.gov.uk/nicsholiday and read the guidance. Eligible businesses should then make their application as outlined in the guidance.
Welcome, and warning
The not-for-profit Forum for Private Business welcomed the incentive, while warning that, unless further cuts follow, disproportionate taxation will remain a major barrier to growth for small businesses.
“For years small business taxation has steadily increased, so this reduction in NI for some firms has to be welcomed,” said the Forum’s chief executive Phil Orford. “However, if the Government is serious about creating conditions for real economic recovery based on strong small business growth, it needs to introduce even bolder tax policies.”
He added: “Given the significant threats to cash flow 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.”