Save up to £50,000 with the Regional Employer NICs Holiday for New Businesses Scheme

On the 22 June 2010, the Chancellor Exchequer George Osborne unveiled plans in the Emergency Budget to introduce a Regional Employer National Insurance Contributions (NICs) Holiday for new businesses. It is hoped to encourage new businesses to start up in areas of the country that have relied heavily on public sector employment. This scheme will end on 5 September 2013. A more detailed explanation of the scheme now follows.

What is the scheme?       

The Regional Employer NICs Holiday scheme provides new businesses in certain areas of the country with a break from paying employer NICs in respect of the first 10 employees that they take on in the first year of business. In other words, the scheme is designed to help new businesses with the cost of taking on employees in the first trading year. The scheme began on 6 September 2010 and will run until 5 September 2013.

Who is eligible for the scheme?

• A sole trader, partnership or company must start a new business in the period from  22  June 2010 to 5 September 2013 inclusive;
  
• The principal location at which the new business is carried out at when it is started must be located within the following regions of the UK: Northern Ireland, Scotland, or Wales; or, if in England: the East Midlands, North East, North West, South West, West Midlands, Yorkshire or Humber (Greater London, the East and South East of England are excluded);
  
• Qualifying employees are employed for the purposes of the new business.

Potential savings

The scheme relieves employers of the need to pay employer NICs in respect of the first ten qualifying employees employed during the first year of the business. New businesses may qualify for a reduction of up to £5,000 for each of these first ten employees they take on. This means a potential saving up to £50,000 for the business. The more qualifying employees you apply for, the more of a saving you will make.

How to apply

The scheme is not applied to automatically so new businesses wishing to take part must apply to do so. An application form is available on the HM Revenue and Customs’ (HMRC) website. The claim can be backdated if the business has already started to employ people.

How to operate the scheme

Employers operating the Regional Employer NICs Holiday scheme will need to withhold the employer NICs that they would normally pay to HMRC in respect of the first 10 qualifying employees. The holiday period for each employee runs from the date on which the employee was taken on (which must be within the first year of business), and runs for 12 months or, if earlier, until the end of the scheme (5 September 2013). At the end of each month or quarter, the amount that the employer pays over to HMRC is the  amount calculated in accordance with the normal rules, less the amount of employer NICs  benefiting from the holiday. HMRC provides a record keeping form on its website and may inspect the records kept by the employer.

For further information please contact Belsize Accountancy on 0207 043 0052 or info@belsizeaccountancy.co.uk. We can advise you how to apply for the scheme and consider strategies to help minimise your NICs liability.

What is new in Corporation Tax?

Here is a summary of some of the key changes to corporation tax. The changes will affect many of our clients operating as contractors or small businesses in the UK.

1.  Main rate of corporation tax:

• From 1 April 2013 — 23%
• From 1 April 2014 — 21%
• From 1 April 2015 — 20%

2.  Small profits rate of corporation tax — 20% (profits between £30,000 and £1.5 million).

3.  From 1 April 2015, companies with profits between £30,000 and £1.5 million will pay a single rate of corporation tax.

4.  ‘Above the line’ (ATL) of Research & Development (R&D) tax credits for large companies are 10%.

5.  Low emission vehicles:

• The 100% First Year Allowance (FYA) for electric and low emission vehicles will extend to 31 March 2018.
• The CO₂ emission threshold will be reduced from 95% to 75% from 1 April 2015.

6. Simplified cash accounting for unincorporated small businesses.

Belsize Accountancy Limited are specialist accountants for sole traders, contractors and limited companies. We can assist you in preparing your tax returns and tax computations and will tailor our advice to the needs of your business. Our services also include iXBRL filing and RTI and CIS submissions for small businesses.

Feel free to contact Belsize Accountancy Limited for more information on 0207 034 0052 by phone or via email at info@belsizeaccountancy.co.uk.

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