Tax Break for Indies Under Scrutiny
Listed under: News
Published: Wednesday, September 08, 2010
The owners of new shops are to be given breaks on the National Insurance Contributions (NIC) they have to pay for each of the first ten employees they hire, as part of the Government's latest scheme to support business growth in the UK.
The 'Regional Employer NICs Holiday for New Businesses' incentive will give retailers in certain areas of the country a break on the controversial tax for the first 52 weeks their employees take up their positions.
The scheme follows a number of other tax incentives by the Government to encourage economic recovery since its election, with the partial reversal of the previous administrations' unpopular plans to increase NI payments for employers by one percent and reduction of corporation tax for smaller businesses, just two of the measures to have been introduced since June.
Start ups to benefit from the incentive include companies based in most areas of the UK, however, those in the South East and London will not be eligible for the break.
Expected to save company owners up to £5,000 per employee, the tax break will come as welcome news to many independent outlets across the UK – two thirds of which currently believe the present system is unfair, according to a recent report from the Forum of Private Business (FPB).
However, despite praising the Government's commitment to supporting economic growth in the UK, some of the country's top business groups have warned that there is still a lot more that will need to be done.
Commenting on the recent scheme, Phil Orford, chief executive of the FPB, says, “For years, small company's taxation has steadily increased, so this reduction in NI for some firms has to be welcomed. However, if the Government is serious about creating conditions for real economic recovery based on strong small business growth, it needs to introduce even bolder tax policies.”
He adds, “Given the significant threats to cash flow and growth from issues such as a lack of bank finance and increasing late payments, recruitment is likely to be slow during the first 12 months for many new firms. The scheme should be available for a longer period than just the first year they are in business.”
The incentive is open to new companies set up on or after 22nd June 2010 and will run until 5th September 2013.
Do you think the Government is doing enough to support small businesses? Email your thoughts to .(JavaScript must be enabled to view this email address)
The 'Regional Employer NICs Holiday for New Businesses' incentive will give retailers in certain areas of the country a break on the controversial tax for the first 52 weeks their employees take up their positions.
The scheme follows a number of other tax incentives by the Government to encourage economic recovery since its election, with the partial reversal of the previous administrations' unpopular plans to increase NI payments for employers by one percent and reduction of corporation tax for smaller businesses, just two of the measures to have been introduced since June.
Start ups to benefit from the incentive include companies based in most areas of the UK, however, those in the South East and London will not be eligible for the break.
Expected to save company owners up to £5,000 per employee, the tax break will come as welcome news to many independent outlets across the UK – two thirds of which currently believe the present system is unfair, according to a recent report from the Forum of Private Business (FPB).
However, despite praising the Government's commitment to supporting economic growth in the UK, some of the country's top business groups have warned that there is still a lot more that will need to be done.
Commenting on the recent scheme, Phil Orford, chief executive of the FPB, says, “For years, small company's taxation has steadily increased, so this reduction in NI for some firms has to be welcomed. However, if the Government is serious about creating conditions for real economic recovery based on strong small business growth, it needs to introduce even bolder tax policies.”
He adds, “Given the significant threats to cash flow and growth from issues such as a lack of bank finance and increasing late payments, recruitment is likely to be slow during the first 12 months for many new firms. The scheme should be available for a longer period than just the first year they are in business.”
The incentive is open to new companies set up on or after 22nd June 2010 and will run until 5th September 2013.
Do you think the Government is doing enough to support small businesses? Email your thoughts to .(JavaScript must be enabled to view this email address)
The problem is of course that many small businesses are one person entities & as such will not gain anything.