Far fewer start-up firms have taken advantage of the Government’s National Insurance Contributions tax break scheme than had been expected according to new figures, with only about 3,000 claims from the over 130,000 new businesses estimated that could benefit in the Government’s impact assessment.
Alison Robinson, a partner in the Landed Estates and Rural Business Group at the Yorkshire office of accountancy firm Saffery Champness, said the uptake in the North of England had been particularly disappointing.
“Our experience of a broad range of rural businesses in the North is that many business owners are unaware of this measure”, she said.
Under the three year scheme, eligible new businesses can take an NIC ‘holiday’ for each of the first ten employees they hire in the first year of business.
Each holiday lasts for the first 52 weeks while the employee is in post, providing these weeks fall within the three year holiday period.
New businesses that participate in the scheme, which is designed to help fledgling firms in regions that are economically hard pressed, do not have to pay the first £5,000 of Class 1 employer NIC due in the first 12-months of business, saving up to £50,000 in tax if 10 employees are included.
The scheme is open to new businesses which were set up after 22 June 2010 and will run until 5 September 2013. Employers can benefit from the holiday deductions each time they are due to make monthly or quarterly payments to HMRC.
Alison Robinson said: “Whilst diversification within existing businesses cannot benefit from these provisions, ventures in new ownership structures can. As the rural economy picks up and business owners would be well advised to consider if advantage of the NIC holiday scheme can be taken as part of their plans for any new business ventures.”