How up to 10 employees can give firms a national insurance holiday
Question: I have recently set up a small manufacturing company and I would like to know if there are any tax incentives for recruiting new employees.
Answer: John McGinn, partner at John MacMahon Chartered Accountants, replies:
As part of a government initiative to support entrepreneurship and promote business start-ups, there are a number of tax incentives on offer. Most relevant for you is the availability of a National Insurance Contributions (NIC) 'holiday' for up to 10 employees. In Northern Ireland, new businesses that are established from June 22 2010, until September 5, 2013, could benefit from an employer's NIC holiday.
For a limited period and subject to certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due for each of the first 10 employees they take on.
There are a number of business sectors that do not qualify due to EC State Aid regulations - for example businesses in the coal sector, road freight transport sector and businesses involved in export-related activities. Under the guidelines, the definition of a new business is strict and HMRC will ensure that the trading activities have not previously been carried on during the six months leading up to the start of the new business.
The incorporation of an existing business or purchase of another would not qualify.
Before you can apply you will also need to register as an employer for PAYE.
For more information see http://www.hmrc.gov.uk/paye/intro/nics-holiday/how-to-apply.htm.