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During the first year of the National Insurance Contributions holiday scheme, only 6,316 businesses applied successfully to take advantage of the new initiative.

The chancellor announced the scheme in his first budget, expecting 132,000 businesses to apply each year. Letters will be sent out by HM Revenue & Customs to 144,000 businesses which had been launched since 22nd June 2010 and, accountants, to remind them of the huge benefits of the NIC holiday.

In a press release one year ago, the Treasury said:

“It is estimated that 400,000 new businesses will benefit by having a lower tax bill from employing new staff.”

However, take up of the scheme has been disappointing. The NIC holiday is worth up to £50,000 for a business, allowing up to £5,000 of National Insurance Contributions for up to 10 employees. Currently the scheme is only applicable to businesses outside the London area, the East of England and the South East. The government has considered opening the scheme up to all micro businesses, but have decided that funds from the public purse should be used to help new businesses in areas where support is needed.

The shadow chancellor, Ed Balls was quoted by the Daily Telegraph as saying that the take up figures for the NIC holiday scheme were an:

“embarrassing setback for the chancellor.”

The exchequer secretary to the Treasury, David Gaulke reported to MPs that the average number of employees claimed for each business would be two, according to research. The letters are intended to act as a reminder for the scheme, although take up is voluntary.

About The Author

Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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