New Businesses Get A Government Boost

From Monday 6th September, new businesses (excluding those in London, the South East and East of England) have been able to start claiming a holiday from NIC contributions for their first ten employees. This holiday will last all the way until the 5th of September 2013.

This new Government initiative was announced in the Chancellor George Osborne’s Budget in June and is entitled ‘The Regional Employer National Insurance Contributions Holiday for New Businesses’. It allows a new employer to make deductions against the amount of Class 1 NICs that they pay every month or quarter on the first ten ‘qualifying employees’ that they have employed since the 22nd June Budget statement.

The holiday only applies for the first year that the employee is with the firm and is limited to £5,000 per employee. Small business reaction to the scheme has been largely positive, with entrepreneurs helpful for any help they can get in this time of deep cuts and cost-cutting exercises.

However, the scheme has come under scrutiny by some critics. The main gripe is that some of the least well-off areas in the country have been excluded. Greater London alone has six of the most deprived boroughs in England. Areas in the South East such as Portsmouth and Southampton have a very high concentration of public sector workers that are likely to suffer job cuts in the near future.

It seems that the Government have made a mistake or an oversight in restricting the scheme on a geographic basis. Rather than devising a more sophisticated system that would make sure the right people get assistance, they appear to have gone with a crude idea that been rushed through without much thought.

Do you plan on opening a small business and will this new scheme be a good incentive for you? Are you in one of the excluded areas and angry about being left out? We would love to hear from our readers.

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