Setting up a new business and already need a holiday?
Well, look no further than a possible National Insurance contributions (NICs) saving of up to £50,000! It’s not quite the same as a sun lounger in the Seychelles but still well worth putting in your holiday form.
HM Revenue & Customs’ Employer NICs Holiday Scheme is available for new businesses starting up between 22 June 2010 and 5 September 2013. It is a regional scheme based on local authority areas, and many areas of the South West have made it on to the list including City of Bristol, Bath & NE Somerset and Gloucester. Even if you’re a little further afield there is a good chance you may still qualify, and you can check whether your business is in a qualifying region.
Like all schemes, there are conditions to be met before you can take advantage of the holiday, but if you meet those conditions – and it is surprisingly easy to meet them – you can claim a deduction against your PAYE liability of up to £5,000 of employers NIC for each of the first 10 employees you recruit. ‘Employees’ even includes a director of a limited company.
Clearly a relevant employee must be paid over the NIC thresholds – you can only claim a deduction if a liability arises in the first place. In the current tax year, 2011/12, the employers NIC threshold is gross pay of £136 per week, so as soon as an employee’s pay exceeds this, you as employer will be paying NIC at 13.8% on the excess. For example, an employee being paid £300 gross per week would normally cost you a little over £22 per week in employer’s NIC. Whilst this may not seem much, over a year it equates to a saving of £1,176 based on just one employee being paid £15,600 gross per year.
The scheme only runs for an individual business for 12 months from the date the business was set up, and whilst time is of the essence in applying to join the scheme so that you do not have to pay over any unnecessary NIC, you can retrospectively apply to join and claim a refund of any NICs paid which do qualify for a deduction.
We would be more than happy to help you to check whether your business qualifies for the scheme and submit an application if required, or with any other PAYE/NIC queries you may have.
