Businesses in the south east of England, which includes Milton Keynes, could see their National Insurance Contributions (NICs) cut by up to £2,000 when the Employment Allowance is introduced in April 2014.
The taxman reckons around 200,000 firms in the region could benefit from the measure which is aimed at reducing the cost of taking on new staff. Some 68,000 firms will pay no employer NICs at all.
Exchequer Secretary to the Treasury, David Gauke, said: “Small businesses are the lifeblood of our economy and we want to do what we can to support them. The Employment Allowance will reduce the cost of taking on new staff, supporting 200,000 businesses in the South East, and hundreds of thousands more across the UK that are ambitious to grow by reducing the cost of hiring their first employee or growing their workforce.”
The allowance will mean that a business that employs one person on £22,400 will pay no employer NICs on that employee’s earnings.
A business employing five adults full-time on the national minimum wage will see their employer NICs bill reduced by over 80 per cent.
The allowance will have to be claimed and businesses will confirm their eligibility for the allowance through their regular payroll processes and up to £2,000 will be deducted from their employer NICs liability over the course of the year.
Businesses paying NICs of £2,000 or less will pay no employer NICs at all.
More than 90 per cent of the benefit of the new allowance will go to businesses with fewer than 50 employees.
Businesses, charities and community amateur sports clubs will be eligible for the new Employment Allowance.
Up to 35,000 charities with employees are expected to benefit by around £45 million a year in total.