NIC holiday take-up remains low

NIC holiday take-up remains low

Didn't find your answer?

I was reading this article- http://www.accountancyage.com/aa/news/2122664/nic-holiday-remains-low - and thinking about why the take up is so low. It doesn't appear to be for the following reasons:

  • The article suggests that 140,000 businesses have registered for PAYE since the scheme's inception so it is not that the businesses aren't being set up and staff taken on; and
  • It isn't for lack of advertsing; I've seen the HMRC "flyer" when businesses are set up and now there are personalised letters too.

So why is the take up so low? Some of it will be Directors paying themselves dividends of course but that can't be all of them. Some of it will be PAYE registrations that were set up in the expectation of taking on staff but then not doing so. But that can't be everyone. Is it just because it is too much hassle to save a few £s?

Replies (7)

Please login or register to join the discussion.

Universe
By SteveOH
04th Nov 2011 11:01

Only available in certain areas of the country

One reason may be that London and the SE cannot join the scheme. I wonder how many of the new companies are based there.

Thanks (0)
Replying to Kent accountant:
Wild Billy Hickok
By Wild Billy
04th Nov 2011 11:33

Perhaps...

I think the implication is that those 140,000 businesses are outside London and the South-East but it is a fair point.

Thanks (0)
avatar
By Discountants
04th Nov 2011 12:49

Bureaucratic Nightmare

We tried this with one client,

The administration and learning the ropes on this was so onerous that it ended up costing us in time around twice the benefit to the client!

If you do fixed prices (as we usually do) don't touch with a bargepole!

Thanks (0)
avatar
By glynisbm
04th Nov 2011 12:55

Wild Billy......I think you have answered your own question;

"Is it just because it is too much hassle to save a few £s?"

 

Thanks (0)
avatar
By neiltonks
04th Nov 2011 13:27

Pay level

It also depends on how much NI is going to be saved. If the employees of the new company are low-paid, there may be no (or very little) NI to be paid anyway.

Thanks (0)
avatar
By Ken Howard
04th Nov 2011 14:08

How many of the new PAYE schemes are director only new co's?

I suspect that the vast majority of the new start ups are one man bands, or husband/wife companies.  It's going to take years (if ever) for these to grow to a size where they'll take on new staff.  You don't just start up one day and employ someone the next.

Business established some time ago which are now large enough to employ aren't eligible.

It was a pretty daft idea thought out by someone with no real life experience of how small businesses operate.

Thanks (0)
By ireallyshouldknowthisbut
04th Nov 2011 14:13

.

How many brand new businesses really employ people on day one?  Most new businesses are the just owner until things are established, and/or they will use contractors/self employed staff to de-risk the whole thing.

Once you take subset of those businesses who actually have staff from the word go, plus the geographic restrictions you end up with very little in the way of eligible firms.

 

Thanks (0)