The take up of the National Insurance Holiday scheme that formed a key part of Chancellor George Osborne's first Budget is still way below the Treasury's initial estimates, the government has confirmed.
Exchequer secretary to the Treasury David Gauke released figures about the scheme to Parliament recently. Just over 10,000 companies have taken up the scheme since June 2010. The government had hoped for a take-up of 132,000 a year when it was announced by Osborne.
The holiday exempts qualifying new businesses in eligible regions from up to £5,000 of employer national insurance contributions for each of the first ten employees hired in the first 12 months of business.
It has received criticism because it is only available in certain regions.
Professionals have call for the scheme to be rolled out across the country. HM Revenue & Customs say that they have sent around 140,000 personalised letters to all businesses that have registered for a PAYE scheme since June 2010 at a cost of around £90,000 in October.
The Exempted areas are:
Greater London (all)
The Eastern Region comprising:
The counties of Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk and Suffolk.
Luton, Peterborough, Southend-on-Sea and Thurrock.
The South East Region comprising:
The counties of Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex.
Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham.
Showing posts with label National Insurance Holiday for New Businesses. Show all posts
Showing posts with label National Insurance Holiday for New Businesses. Show all posts
Monday, 16 January 2012
Friday, 17 September 2010
NIC Holiday for New Businesses
Further to the announcement in the June 2010 Coalition Budget, we now have more details regarding the NIC holiday for new businesses.
Subject to meeting the conditions, new businesses qualify for a deduction of up to £5000 on Employers NIC contributions, for each of the first ten employees taken on in the first year of trading. Each holiday will last for the first 52 week of employment.
Main Conditions:
Start up date: From 22 June 2010 to 5 September 2013. (But you can only deduct employers NIC due on earnings paid after 6 September 2010.)
Location: Northern Ireland, Scotland, Wales, East Midlands, North East, North West, South West, West Midlands, Yorkshire and Humber.
Some businesses located within the EU will be eligible where they are paying UK NICs.
This is based on your principal place of business.
Business Type: Managed Service Companies do not qualify.
IR35 – only salary or wage payments qualify, not ‘deemed earnings’.
Has to qualify for de minimis State Aid.
Start Date: Earlier of trading date and date first employee hired.
‘New’ Business: There are anti avoidance rules regarding what is considered a new business.
Points to bear in mind:
This legislation is expected to receive Royal Assent in early 2011. Therefore, if for any reason it does not become law, any relief already deducted will have to be repaid by 19 April 2011.
In the case of a limited company, directors count towards the first ten employees.
If an employee leaves, the replacement employee does not qualify if there are already ten employees in place.
Records of employees, earnings and contributions will need to be kept.
There will be a separate NIC holiday end of year return at 5th April.
Businesses need to apply for the scheme, the application form is available on the Business Link website.
Subject to meeting the conditions, new businesses qualify for a deduction of up to £5000 on Employers NIC contributions, for each of the first ten employees taken on in the first year of trading. Each holiday will last for the first 52 week of employment.
Main Conditions:
Start up date: From 22 June 2010 to 5 September 2013. (But you can only deduct employers NIC due on earnings paid after 6 September 2010.)
Location: Northern Ireland, Scotland, Wales, East Midlands, North East, North West, South West, West Midlands, Yorkshire and Humber.
Some businesses located within the EU will be eligible where they are paying UK NICs.
This is based on your principal place of business.
Business Type: Managed Service Companies do not qualify.
IR35 – only salary or wage payments qualify, not ‘deemed earnings’.
Has to qualify for de minimis State Aid.
Start Date: Earlier of trading date and date first employee hired.
‘New’ Business: There are anti avoidance rules regarding what is considered a new business.
Points to bear in mind:
This legislation is expected to receive Royal Assent in early 2011. Therefore, if for any reason it does not become law, any relief already deducted will have to be repaid by 19 April 2011.
In the case of a limited company, directors count towards the first ten employees.
If an employee leaves, the replacement employee does not qualify if there are already ten employees in place.
Records of employees, earnings and contributions will need to be kept.
There will be a separate NIC holiday end of year return at 5th April.
Businesses need to apply for the scheme, the application form is available on the Business Link website.
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