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HM Revenue and Customs have now published a Technical Note confirming the terms that apply to the National Insurance (NI) ‘holiday’ for new businesses, introduced on 6 September 2010.
For the NI holiday to apply, the new business has to have been started after 22 June 2010 (Budget Day) and by 5 September 2013. Certain types of employment (e.g. nannies) do not qualify, nor do businesses which are in Greater London and the South East (see the Technical Note for precise details).
The NI holiday does not apply to employee contributions, but only to the employer’s contributions. It lasts for each employee for one year from the day on which they are first employed. The maximum NI that can be avoided is capped at £5,000 per employee.
The NI holiday will reduce the cost of employing new staff by approximately ten per cent, so is a factor to consider if you are thinking of setting up a new business.