It has been a matter of policy for the government to reverse plans of the previous administration to push up national insurance contributions by 1 per cent as from next April.
Accordingly, the Chancellor said that, from April 2011, the threshold at which employers start to pay national insurance contributions will rise by £21 a week above the rate of inflation.
This means there will be a fall in the cost of employing staff on incomes less than £20,000 a year.
Some 650,000 employees will be removed from NIC charges altogether.
The Budget also unveiled a new scheme designed to encourage private sector growth in those areas where there is high public sector employment.
Firms that set up outside London and the south-east of England will not have to pay employers’ national insurance contributions on the first ten employees they recruit during their first year in business.
The exemption is to be limited to a maximum of £5,000 per employee or £50,000 per firm, and can be applied for at any time over the next three years.
The scheme should come into effect as from September 2010, but any new business that sets up from 22 June can benefit provided it meets the relevant criteria.
