Will your business qualify for the NIC holiday, and how much would it be worth?

Despite being announced in the budget, full details of the scheme were only published on Friday 30^th August.

If you started a new business on or after 22 June 2010 or plan to do so before 5 September 2013 you should qualify for this holiday if you start your business outside Greater London, the South East and the East. There are rules about what qualifies as a new business and to stop you taking a few months off and then restarting in business. There are also special rules for some types of business (particularly farming). When considering location you look at the Principal Place of Business and regions are defined by local authority areas – as an example Hampshire is excluded but Dorset qualifies.

The scheme gives you twelve months exemption from Employers Class 1 National Insurance Contributions on the first ten employees taken on provided they start within the first twelve months of the new business. Employers NIC is currently charged at 12.8% of earnings over £110 per week. There is a cap on the NIC holiday of £5,000 per employee, so it could be worth £50,000. As an example, if you take on an employee earning £30,000 you will save £3,100 over the first year, while for an employee on £20,000, this saving is £1,800.