With three months to go until the introduction of the new ‘Employment Allowance’ – which will wipe out up to £2,000 off the total National Insurance bill of every business – new figures show that the government’s announcements to cut employers’ National Insurance contributions (NICs) will save nearly £5.5 billion per year for employers by the end of the Parliament.
This is equivalent to £200 per employee by the end of the Parliament.
The savings to businesses come from three things:
– The new Employment Allowance taking effect from April this year
– The abolition of employer National Insurance for employees under the age of 21 from April 2015
– And raising the threshold before a business starts paying National Insurance for an employee in April 2011, which reversed the most damaging part of the increase in the employer NICs rate, under inherited plans.
The figures come as the Chancellor George Osborne launched the countdown to the introduction of the Employment Allowance.
Marking three months until the Employment Allowance comes into effect, the Chancellor of the Exchequer visited two small businesses that will benefit from its introduction in April 2014.
As a result of the Employment Allowance Chiff-Chaff Cafe which opened in September this year in Bedford and employs two people will see its employer NICs bill completely wiped out.
Ridgeway Garage in Enfield employs nine people including an apprentice and will be able to benefit from the full £2,000 allowance – its employer NICs bill will be reduced by 25 per cent.
Discussing the actions this government has taken to support businesses with the cost of employment, the Tatton MP said: “Small businesses make a vital contribution to our economy, creating jobs and stimulating growth.
“The ones I have visited today want to expand, take on new staff and make new investments, so the actions we have taken to cut the jobs tax will be a real boost to them.
“Effectively providing cashback on jobs, the Employment Allowance will help these businesses achieve their goals and help the UK succeed in the global race.
“With three months to go until the introduction of the Employment Allowance, I am shining a spotlight on this scheme which demonstrates our support for small businesses and enterprise.”
For all the latest news see Thursday’s (January 16) Echo.