1 July 2010 - New NIC measures

Holiday for New Business Arrives In the NIC of Time

A new scheme announced in the Emergency Budget by the Chancellor is intended to begin no later than September 2010.  This measure will see a portion of new businesses become exempt from paying the first £5,000 of employer's Class 1 NICs due in the first 12 months - having hired a maximum of 10 employees.

The incentive will be introduced for new businesses who meet qualifying criteria, entitling them to a substantial reduction in their NIC bills.  Although the scheme is not intended to begin until September, new businesses set up from 22 June 2010 may also be able to benefit.

This 'NIC Holiday' has a potential saving for businesses of up to £50,000.  HM Revenue and Customs has estimated that up to 400,000 new business could end up benefiting from it.  By regionalising the tax breaks, the Government will be hoping to boost private sector growth within specified regions of the UK.

Who Will Qualify?

The exact criteria for qualifying for the new scheme will be published shortly.  However, the measure is targeted directly at new businesses which undertake a significant degree of new economic activity in all areas of the UK, except those in London, The Greater South East and East Anglia.

Personal Service Companies or individuals employed through Managed Service companies will be excluded, as will employees engaged by individuals for personal domestic services (such as nannies).

Paul McKay, Tax Director at Booth Ainsworth, says on the matter:  "I believe this new measure is a positive step.  Hopefully, potential business start-ups will recognise this as a great opportunity for the North West.  I encourage those thinking about starting up to really use the timing of this scheme to their advantage".