Save your business thousands of pounds of National Insurance

Duncan Mitchell

Duncan Mitchell

Today we have a guest post from Duncan Mitchell, a director at CED Accountancy Services, based in Towcester. I wanted to get an expert in to make sure I share the correct and appropriate information with my readers, so here’s Duncan’s explanation of the government’s new reduced national insurance contributions scheme, giving relief to employers on Employers’ National Insurance Contributions. Read on to find out more …

In June 2012, according to the Office for National Statistics, growth in the UK economy slowed, partly because of the extra bank holiday in April that year. The Federation of Small Businesses called for a reduction in National Insurance contributions and company owners indicated to the Federation of Small Businesses (FSB) that they would take on more staff if National Insurance contributions were cut. Boris Johnson also applied his extensive economic knowledge to the problem and urged the government to “look at” lowering the cost of National Insurance in an effort to stimulate the economy.

And so, in the March 2013 budget, the Chancellor introduced relief for the first £2,000 of Employer’s National Insurance Contributions for ALL employers from April 2014. This means that the smallest businesses may not have to pay any Employers’ NIC at all.

We must not forget that in 2010 the Coalition government introduced a geographically targeted scheme to help new businesses in the UK. The dividing line as to whether a new business qualifies is very near here. For example, Towcester, Northampton and Brackley qualify for the scheme, while Stony Stratford and Banbury do not.  Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the Employer’s NICs that would normally be due – for each of the first ten employees they take on. This scheme is still in operation and will be until September 2013.

So far, though, the scheme has proved to be a flop. Fewer than 20,000 businesses have applied for the relief, even though the Chancellor had targeted 400,000 over 3 years.

Possibly a reason that take up has been poor is because the reliefs have not been communicated adequately to business owners. At CEDAS we feel we feel it is very important that new businesses are aware of the tax breaks available to them, as for some early-stage businesses the availability and use of these reliefs could be ‘make or break issues’.

The views given in this blog are personal to the author, if you would like to discuss the contents of this post with CEDAS please contact them on 01327 358 866 or take a look at their website.

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