In an attempt to boost job creation, George Osborne announced in the most recent budget speech that every UK employer will receive a £2,000 cut from their National Insurance Contributions (NICs).
The scheme will come into force in April 2014 and effectively means that around 450 000 small businesses will no longer pay any employer NICs.
According to the budget speech documents “the employment allowance will reduce the cost of taking on new staff for small businesses; supporting those with an ambition to grow by hiring their first employee or expanding their workforce.”
“For small businesses or limited companies who are yet to employ staff, this could be an incentive to hire that first staff member,” says Liam Collins of 1st Contact Accounting. “If you are a one-person limited company, this move could make it worthwhile employing your first staff member and paying a salary between the NI threshold and the personal allowance. If your business is doing well and you feel that you need an extra set of hands, start planning now to employ that person early in 2014, when you can take advantage of the NIC allowance.”
Collins believes that this allowance is encouraging. “With literally millions of small businesses in operation in the UK, this relief is a small step in the right direction towards our economic recovery.”
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