NIC holiday: the egg timer is running out
The Government’s National Insurance Contributions holiday for start ups has been one of its more attractive recession measures. However, the egg timer is now running out for entrepreneurs wanting to fully benefit from the tax break. Here Ken Davies director of payroll at leading North West accountants Mitchell Charlesworth, which has offices in Liverpool, Manchester and Cheshire, explains the background.
In George Osborne’s budget in June 2010 he announced the eye catching National Insurance Contributions (NICs) holiday for start-up businesses. Under the measure new firms do not have to pay employers NICs of up to £5000 on the first 10 employees they hire in their first year of trading – a potential saving of £50,000.
The NICs holiday is available to new businesses that start up and begin employing staff during the period from 22 June 2010 to 5 September 2013. However, the tax break operates on a strict 12 month basis. To benefit from a full year of NICs savings, start-ups must have started employing staff at the latest, from September 2012 as the tax break finishes in September 2013.
It is important to point out there are criteria to meet. For example, it is only available to firms set up outside London, the Southeast and East England and certain sectors have a limit on how much they can claim.
It is also important to note that firms can claim NICs back retrospectively right up until September 2013 – providing the firm was set up after 22 June 2010 and has not yet claimed for members of staff they employed in their first year of trading.
To fully benefit from the NICs holiday and other tax planning measures it is advisable to use an accountant who can offer the complete accountancy service. Too many start-ups cut corners on finance and miss out on help with payroll, saving tax and planning for growth. Accountancy and tax is a devilishly complex area. It requires specialist knowledge to be understood. That is why Mitchell Charlesworth has a specialist start-up division whose services are affordable to new businesses.
This was posted in Bdaily's Members' News section by Ken Davies .
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