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April 2013

Employer NIC holiday

The employer National Insurance contributions (NIC) holiday is still open to employers until 5th September this year. Having opened to new businesses on 22nd June 2010 the NIC holiday allows for a deduction of up to £5,000 on the employer NICs that normally would be due – for each of the first ten employees they take on.

There are certain criteria that businesses have to comply with in order to qualify for the holiday, one of which is that the primary business location must be in the UK.

In most cases the primary location of the business should be obvious but if it is not (for example if your business is internet based) then the principal place of business will be where you keep your equipment, where you retain your business records or carry about the administrative parts of your business. If you have multiple locations for your business, one of which qualifies for the holiday and one which doesn’t, then the primary location is the one used as your head office which will be considered to be your principal place of business.

The holiday is only open to new businesses which have started during the holiday window (22nd June 2010 to 5th September 2013). The start date for your business will be judged as the earliest date of when your business started to trade or when you first hired an employee. Once the start date has been established the holiday will run for 12 months from that date.

Most new businesses will be considered but managed service companies do not qualify for the holiday. Where an employer within the intermediaries legislation, commonly referred to as IR35, meets the holiday qualifying criteria, they will be eligible for the holiday on the salary or wage payments they make. They will not be eligible for the holiday on income deemed to be earnings or employment resulting from the IR35 rules.

If you would like to talk to someone about this in more detail, please contact us today.