From 6 September 2010 new business set up outside London, the South East and East of England will be eligible for a holiday worth up to £5,000 for each of the first ten employees they hire in their first year of business (that is up to £50,000 in total).

The Holiday operates by allowing a deduction against the amount of Class 1 NICs that an employer is required to pay to HMRC each month or each quarter. With two main modifications, new businesses that were started between 22 June 2010 (the date of the Chancellor’s Emergency Budget) and the 5 September 2010 will benefit to the same extent as a new businesses started on or after 6 September 2010 provided they satisfy the eligibility tests. 

  • For the first ten qualifying employees that a new business employs in its first year of business, following start up, it will be entitled to an individual Holiday for each of those employees.
  • The Holiday period for each employee will last for the shorter of the employee’s first year of employment or the time left until the Holiday scheme ends on 5 September 2013.
  • The Holiday will apply to all relevant earnings paid to a qualifying employee during the first year of the employee’s employment but there will be a maximum saving of £5,000 in employer NICs in respect of each employee.
  • The Holiday will be administered as a de minimis State Aid. New businesses wishing to enjoy a Holiday will need to make an application to HMRC when they engage their first employee. Full guidance will be available on the Business Link website for those interested in applying.
  • The Holiday will be entirely voluntary and will enable qualifying new businesses that choose to participate to reduce the amount of secondary (employer) NICs liability that they would otherwise have to pay over to HMRC.
  • The scheme will run for three years.

  • We are creating a new tax guide to summarise the measures for you but in the meantime, you can go to www.businesslink.gov.uk/nicsholiday amd also HMRC's
  • a technical note on the National Insurance Holiday http://www.hmrc.gov.uk/budget2010/nics-hol-new-bus-tn.pdf

     

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