In his first budget George Osborne announced the introduction of a scheme to exempt certain qualifying businesses from Employers National Insurance. The full details of the scheme, known as the Regional Employer National Insurance Holiday have now been announced, although the relevant legislation has yet to be passed by parliament.
The Holiday will be available to qualifying new businesses starting up in certain designated areas of the UK during the period 22 June 2010 through to 5 September 2013. However, deductions can only be made from Employer’s National Insurance incurred from 6 September 2010.
Qualifying businesses will potentially be able to reduce their Employer’s National Insurance liability by up to £5,000 per employee for each of the businesses first 10 employees - a total potential saving of £50,000.
The scheme is 100% voluntary. Therefore to take advantage businesses that qualify will need to make an application to HM Revenue and Customs. This can be done online or in paper form. Once the application is processed HM Revenue and Customs will inform you if your application has or has not been successful. If successful you will be provided with details of the maximum amounts of relief you can claim.
The scheme is, as you would imagine, governed by a whole raft of guidelines, rules and regulations and in the main these are aimed at stopping existing businesses taking advantage of the holiday by simply setting up a new company and saving (up to) £50,000 in National Insurance.
In summary HM Revenue will not consider a business new if:
at any time in the six months leading up to the start of this business, you carried on another business and the new business consists (or mostly consists) of activities that were undertaken in the other business
you begin to carry on a business as a result of a transfer of another business and the activities of the new business (or most of them) were previously carried on in the other business
you begin to carry on a business and before the business starts you enter into an arrangement to take on an existing business or part of an existing business at some point during the period of the NICs holiday
With the large amount of rules governing the scheme you have to wonder how many businesses will actually benefit from the holiday.
For further information and detailed guidance on your individual circumstances contact us on 01386 49999 or at firstname.lastname@example.org
Tim Pearce FCCA Director
Crump Pearce & Co Ltd Chartered Certified Accountants