New businesses to take advantage of National Insurance Contributions holiday (From York Press)

New businesses to take advantage of National Insurance Contributions holiday

12:06pm Wednesday 1st September 2010 in

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NEW businesses in York and North and East Yorkshire should stand by to take advantage of a National Insurance Contributions (NIC) holiday being introduced next Monday.

York accountancy firm Garbutt & Elliott has flagged up a significant change to the tax system announced at the emergency Budget.

Richard Whitelock, tax consultant and a member of Garbutt & Elliott’s employment rewards and solutions team, said: “This holiday is aimed at providing new businesses with a substantial reduction in their employers’ NIC.”

While the detailed guidance and legislation have yet to be finalised, some key points have been announced, including:

• The NIC holiday will apply to new businesses created on or after June 22 (Budget day) and will run until September 5, 2013.

• Every new business can claim an NIC holiday for the first ten employees it hires in its first year of business.

• The holiday is worth a maximum of £50,000 for new businesses – £5,000 for each of the first ten employees taken on.

Mr Whitelock said: “Clearly, there will be scope under the proposed NIC holiday for new businesses to make significant cost savings on employers’ NICs, which will be all the more welcome given the ongoing economic pressures.

“This is technically only a proposal at present, although the specific rules have now been announced. The legislation is not likely to get royal assent until early 2011, but the scheme will apply from Monday.

“So our advice for all new businesses, and prospective new businesses, is: be aware of this developing opportunity, and seek professional advice as to how you may qualify and maximise the benefits available.

“One thing is for sure. The relief is not compulsory. Businesses need to apply and Inland Revenue will be issuing application forms later this week.”