HMRC has now issued a technical note explaining in detail the new National Insurance Holiday for news businesses proposed in the June 2010 budget. A bill, to this effect, to be introduced this autumn is expected to become law early 2011.
The holiday runs from 22 June 2010 to 05 September 2013. New businesses started/starting up outside the excluded regions during this period can opt not to pay the employers’ National Insurance Contributions due on employees’ earnings from 06 September 2010. The holiday is available to the first 10 employees employed in the first year of business. The maximum amount of savings is limited to £5,000 per each qualifying employee in effect limiting the maximum financial savings to £50,000 for any business.
The key conditions of eligibility are that:
· It should be a new business starting up in the period 22 June 2010 to 5 September 2013 (the relevant period),
· the principal place of the new business carried on when it started should be outside the excluded region, and
· the qualifying employees are engaged for the purposes of the new business
The Holiday is available to newly incorporated businesses, sole traders and partnerships. Qualifying employees are those first employed for the purposes of the new business before the end of the ‘initial period’ which lasts a year.
The three excluded regions are as under:
1) Greater London
2) The Eastern Region comprising:
(a) The counties of Bedford, Cambridgeshire, Central Bedfordshire, Essex, Hertfordshire, Norfolk and Suffolk.
(b) The non-metropolitan districts of Luton, Peterborough, Southend-on-Sea and Thurrock.
3) The South East Region comprising:
(a) The counties of Buckinghamshire, East Sussex, Hampshire, the Isle of Wight, Kent, Oxfordshire, Surrey and West Sussex.
(b) The non-metropolitan districts of Bracknell Forest, Brighton and Hove, Medway, Milton Keynes, Portsmouth, Reading, Slough, Southampton, West Berkshire, Windsor and Maidenhead and Wokingham.
New businesses wishing to enjoy the holiday will need to make an application to HMRC when they engage their first employee. The HMRC note also includes detailed rules as to the records that payroll services must keep and the annual returns that must be submitted to HMRC in this regard. There are anti-avoidance provisions included in the note to prevent businesses from exploiting the holiday.
