National Insurance Contributions holiday for new businesses began on the 6th September, which means that businesses set up since the Budget announcement on 22nd June 2010 can now claim holiday from NIC contributions for their first 10 employees.
This new scheme was unveiled in Chancellor George Osbourne’s June Budget and will mean that qualifying employers can begin reducing their contributions from 6th September 2010 by making a deduction against the amount of Class 1 NICs they pay each month or quarter.
The three-year scheme is available to qualifying new businesses set up on or after 22nd June 2010, however is only available to those outside London, South East and East England.
It provides an exemption limited to £5,000 for each employee during their first year with the firm or until they leave.
Most business sectors will be eligible for the holiday, but some will be excluded, for detailed conditions relating to the holiday read the HMRC Technical Note
NIC holiday makes no changes to rules for calculating, recording and reporting Class 1 NICs. At the end of the tax year the business should submit the normal end of year returns showing the full amount of NICs that were due. A separate ‘holiday’ return will need to be sent to HMRC showing the deductions made to explain underpayment on the P35, this needs to be done at the same time at the end of year tax return.
For more information on these changes, visit the HM Revenue & Customs website here.