In the belief that sustainable and balanced growth must be based on private sector enterprise and investment, the Government is introducing the Regional Employer National Insurance contributions Holiday for New Businesses in order to reduce the cost of employing staff and help new businesses in these areas to create jobs. The creation of new enterprises in areas most dependent on public sector employment will, they hope, support transition to a new, sustainable model of economic growth

It’s called the ‘Regional Employer’ holiday because it only applies if your principal place of business is situated within designated areas of the UK at the time your business starts up. If, for example, you are setting up a new business in the South West (including Gloucestershire), the ‘holiday’ applies, whereas if you’re setting up in Oxfordshire, it does not.
In most cases, there should be little doubt about whether your business started up in a qualifying region, but in some instances your principal place of business may not be clear. You may need to provide proof that your principal place of business is within an included region. If you run an internet-based business or your business involves driving around, or you operate from more than one location, the place where you keep your equipment and your business records, carry on the administrative side of your business, or use as your head office, may be considered to be your principal place of business.

The new Bill is expected to be made law around January 2011. You can apply to take advantage of the holiday now, but if the Bill doesn’t get passed or significant changes are made to it, you may be faced with a Bill for unpaid NI contributions. If you choose to wait until the Bill has been passed you will then be able to claim a refund of the employer NICs you could have been deducting under the scheme.

Will Abbott of Randall & Payne, Gloucester, says: “Whilst we welcome any help for business in the current time, there are strict rules to prevent existing businesses taking advantage of the rules by setting up new companies to undertake existing work. The measure is clearly aimed at new businesses but unfortunately the majority of new businesses do not survive long. These new businesses will have an unfair advantage over established business. Consequently, the measure may not create new long-term jobs but simply move them from one company to another. What will happen when the subsidy runs out and these new companies have to compete on the same basis? Vince Cable talked about “levelling the playing field”, but this measure hardly does that for existing business.”

For full information on the scheme or to see if applies to your business, contact Will Abbott at Randall & Payne on 01452 723377