Far fewer start-up firms have taken advantage of the Government’s NIC tax break scheme than had been expected, according to new figures.
Under the three-year scheme, eligible new businesses can take a ‘NIC holiday’ for each of the first 10 employees they hire in their first year of business. Each holiday lasts for the first 52 weeks the employee is in their 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 NICs due in the first twelve months of business, saving up to £50,000 in tax if ten employees are included.
The scheme is open to new businesses set up on or 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 HM Revenue and Customs (HMRC).
But a report in Accountancy Age has indicated that just 3,000 businesses have applied to join the scheme in the period spanning September 2010 to March 2011.
The information was released in a Parliamentary answer from David Gauke, Secretary to the Treasury.
The Government had believed that some 132,000 enterprises would qualify for the tax break annually.
Most kinds of new employers are eligible for the holiday, provided they meet certain criteria, and most employees will also qualify, although there are some exceptions such as workers engaged through managed service companies.
Any new business wishing to find out if they are eligible for the holiday and wanting more details should visit http://www.hmrc.gov.uk/paye/intro/nics-holiday/eligibility.htm
