02/09/2010
HM Revenue and Customs will give a one year National Insurance holiday to start ups for the first 10 people they employ, from next week.
As reported by The Telegraph, new businesses will be able to claim up to 5,000 in NIC per employee, except those trading in the agricultural, fishing and coal sectors. The tax holiday will also only apply to those located outside Greater London, the South East and Easter regions of the UK, as announced by George Osborne in the emergency Budget.
The news could encourage start ups to grow their work force sooner than they'd planned, as the financial incentives will save them a significant amount of money. Whilst start ups could find it hard to secure a traditional business loan to fund employing extra people, other methods of funding are available, such as invoice factoring which can give a 90% cash advance on invoices issued to clients.
Businesses that have been set up since June 22 will be able to claim back NI contributions for 12 months, but from September the 6th. The tax break will run until September the 5th, 2013.
According to The Guardian, it's hoped the NIC holiday will focus on the need for austerity to avoid a spirally debt crisis and the need to stimulate the private sector enterprise and growth.
It's expected that the government will also set out a five-year plan to cut corporation tax and raise the income threshold to 10,000.
Laura Nineham