National Insurance Holiday Does Not Go Far Enough, Says Business Group

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The Forum of Private Business is welcoming a National Insurance (NI) holiday for some start-ups but calling for further tax breaks if small businesses are to be the catalyst for sustained economic recovery.

The Forum of Private Business is welcoming a National Insurance (NI) holiday for some start-ups but calling for further tax breaks if small businesses are to be the catalyst for sustained economic recovery.

The Forum of Private Business is welcoming a National Insurance (NI) holiday for some start-ups but calling for further tax breaks if small businesses are to be the catalyst for sustained economic recovery.

The ‘Regional Employer NICs Holiday for New Businesses’ scheme gives new firms in certain areas of the UK a ‘holiday’ on employers’ NI contributions for each of their first 10 employees they hire in the first year of business. It will last for the first 52 weeks the employee is in position.

The launch of the NI scheme follows other recent tax incentives, including a partial reversal of the previous administration’s plans to increase employers’ NI by 1% and a 1% reduction in small firms corporation tax, which was announced in June’s ‘emergency’ budget.

The Government has also launched a new Office of Tax Simplification to provide the ‘ independent advice on simplifying the UK tax system’.

Following the budget’s sweeping public sector cuts, the Government is hoping to create a private sector led recovery – with small business growth placed at the forefront of this revival. However, the not-for-profit Forum is warning that, unless further cuts follow, disproportionate taxation will remain a major barrier to growth for small businesses.

“For years small business taxation has steadily increased, so this reduction in NI for some firms has to be welcomed,” said the Forum’s Chief Executive Phil Orford. “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 added: “Given the significant threats to cash flow and business 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 scheme is open to new businesses set up on or after 22 June 2010 and will run until 5 September 2013.

It applies to start-ups in the North East, Yorkshire and the Humber, the North West, the East Midlands, the West Midlands, the South West, Scotland, Wales and Northern Ireland. It does not apply to businesses in London and the South East.

In addition, new businesses in the agricultural, fishing and coal sectors will not be able to claim the tax break, worth up to £5,000 per employee.

According to the Forum’s Tax and Budget member panel, which is part of the organisation’s Communications Director business support solution, 45% of respondents to a recent survey said their tax burden was a ‘very serious' issue for their firms.

In all, more than two-thirds of SME owners believe the tax burden placed on them is unfair. Further, 43% of respondents said ‘fairness' should be the main priority for the tax system. One in five cited ‘simplicity', echoing widespread anger with a system which is among the most complex in the world.

In addition,13% said they want to see the tax system reformed to make the UK more competitive internationally.

Notes to editors

Formed in 1977, the Forum of Private Business is evolving following a year of intensive research about the real needs of small businesses.

As an invaluable extension to its members’ teams the not-for-profit organisation has developed a range of tailored business solutions to support, protect and reassure small firms throughout the lifecycle of their businesses.

These are: ‘Finance Director’, ‘Legal Director’, ‘HR Director’, ‘Health and Safety Director’, ‘Development Director’, ‘Purchasing Director’, ‘Communications Director’ and ‘Managing Director’.

For full list of services under each solution and/or membership package, visit http://www.fpb.org/membership or call 0845 612 6266.

Images of key Forum spokespeople, along with the Forum’s logo, can be downloaded here.

Broadcast media – the Forum has ISDN capability and can provide comment, in quality audio, at short notice.

The FPB can also provide journalists with localised and sector-specific case studies.

About the Forum of Private Business

A not-for-profit organisation, the Forum of Private Business provides a personal, friendly and highly tailored service to its members – with the primary purpose of helping them run their businesses more profitably.

Representing thousands of small businesses across the UK – including retail, service providers and manufacturing companies – the Forum is recognised by the Government as one of the six main business support and lobby groups. It uses this position to influence decision-makers in the UK and Brussels on the issues that matter to small businesses. Visit http://www.fpb.org.

The Forum helps owners and managers of small and medium-sized businesses to comply with regulations via its dedicated member helpline, 24-hour legal advice line, and Health and Safety Guide, Employment Guide and Credit Control Guide.

In addition, the Forum’s http://www.smallbusinesschannel.co.uk was launched in June 2009, providing a wealth of free video advice and information on a range of topics to business owners and managers.

The Forum is a proud supporter of the Children’s Cancer and Leukaemia Group (CCLG): http://www.fpb.org/charity
Media contacts

Phil McCabe
Media and PR Manager
Tel:    01565 626019
ISDN: 01565 654673
Mobile: 07775 756312
Email: phil(dot)mccabe(at)fpb(dot)org

Chris Gorman
Media and PR Assistant
Tel:    01565 626016
ISDN: 01565 654673
Mobile/out of hours:    07775 756300
Email: chris(dot)gorman(at)fpb(dot)org

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