Start-ups missing out on ‘jobs tax’ support
David Bennett, tax partner at Moore and Smalley , says many businesses that started between June 2010 and September 2013 are unaware they could recoup employer National Insurance Contributions (NICs) paid on the staff they recruit.
Under HMRC’s employer NICs holiday scheme, new businesses may qualify for a deduction of up to £5,000 from the NICs that would normally be due for each of the first ten employees they take on, providing they meet certain conditions.
The scheme, which covers employees recruited up to 12-months after the business started, was announced in the ‘Emergency Budget’ of June 2010 and was designed to boost economic growth by encouraging the formation of new businesses in many regions of the UK, including the North West. However, so far very few businesses have taken advantage of it.
The reminder to take advantage of the scheme comes as the government prepares to introduce new legislation which will offer all businesses, regardless of how long they have been trading, support with employer NICs from April 2014.
David Bennett said: “The government’s decision to allow businesses to recoup up to £2,000 in employer NICs from April next year will be a welcome boost for those that are put off recruiting new staff because of the tax implications of doing so. However, many fledging firms are unaware that they could already qualify for the existing scheme and be saving money now.
“For some small businesses this could add up to a significant sum that could be reinvested in the business. I would urge all small businesses that have been established since June 2010 to contact their tax advisor to see if they are eligible to claim money back.”
Chancellor George Osborne announced in this year’s Budget plans for an ‘Employment Allowance’ which will allow every company in the UK to wipe up to £2,000 from their National Insurance Contributions from April next year.
The new relief is designed to encourage small businesses to hire their first employee or expand their workforce. It would allow a company to hire one employee earning £22,400, or four workers on minimum wage, and be free from NICs. But it also applies to larger companies and is payable regardless of whether they take on any new employees.