Employment allowance: £2,000 NIC break unveiled for 2014-15

The centrepiece in a Budget speech carefully crafted to appeal to the small business was the Chancellor's announcement of a £2,000 “employment allowance” that will cut £2,000 from every company’s NIC payments.

The annual £2,000 allowance will be offset against every employer's Class 1 secondary NICs from April 2014. The allowance will be claimed as part of the normal payroll process through RT, explained paragraph 1.19 of the Overview of Tax Legislation and Rates (OOTLAR)

But aside from the Chancellor's comment and the OOTLAR paragraph, no further information is available as NI measures often go through a separately from the annual finance bill, explained Rebecca Benneyworth.

“This is big,” she commented during the speech, adding later that it was a genuine stimulus for smaller businesses.

“It will relieve employer contributions, but not employees’. But it’s still a significant move to remove tax on jobs,” she said. “It’ll be claimed through the normal RTI process, after the government consults with stakeholders about implementation.”

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Comments

heading?    1 thanks

jfowen | | Permalink

The title says 2013/14 indicating it's due to start but the body of the article indicates it comes in from April 2014 (2014/15)

Taxed    2 thanks

ayjay3 | | Permalink

It maybe a £2,000 saving on NI conts but won't it incur corporation tax as it will increase profits; so effectively only a saving of £1,600

silicondale's picture

All very nice, but ...    8 thanks

silicondale | | Permalink

... it's actually a complication rather than a simplification. Why not just move all the lower thresholds up to £10,000? When is the government (ANY government) going to grasp the nettle of integrating NICs and income tax - or at least the thresholds for calculating them? We now have the nonsense of 5 different NIC thresholds, accrual points, and limits, mostly not aligned with the income tax thresholds. A £10,000 personal allowance doesn't actually take people out of tax - because for a couple of thousand pounds of income below that, they are still paying 12% NICs. Keeping the tax and NIC regimes separate just allows successive chancellors more opportunities to bamboozle us.

A carrot before the storm

mwangishah | | Permalink

A few years ago, self employed people were given the chance to incorporate with the first £10,000 not being charged to CT. Once people incorporated allowance was taken away. Suspect that this may be to get the possible IR35 companies to start paying wages and then catch them in the future. Or how are they going to fund the current pension ???

One of those things

Ian McTernan CTA | | Permalink

That sounds very simple in theory, but let's see how badly they maul it with legislation and make it complicated and hard to claim with penalties attached when employers get it wrong.

I'm amazed they went with the 'one allowance for all size companies' route, normally HMRC like to put in tapers, exclusions, upper limit on size of company etc.

Maybe they decided it was all their creaking bloated convoluted RTI system could cope with!

Heading?

craigbisby1 | | Permalink

jfowen wrote:

The title says 2013/14 indicating it's due to start but the body of the article indicates it comes in from April 2014 (2014/15)

 

The title does actually state 2014/15

If you are a one person

jonbryce | | Permalink

If you are a one person limited company with only the director/shareholder as an employee, it will make it worthwhile paying a salary between the NI threshold and the personal allowance, but above that, it will still be cheaper to pay dividends.

TRIVIAL BENEFIT

AWebbie | | Permalink

This "big deal" is totally trivial. It is worth approximately the Employer's NI on a single employee. The employer still has to pay the other 90% or more of the cost. Can someone explain how it is a BIG stimulus to small businesses?

John Stokdyk's picture

Since corrected    2 thanks

John Stokdyk | | Permalink

Thanks for pointing out the heading error. At one point after I tried to fix it the heading read 2015-15, but I think we've got it right now. It was a long day...

Groups?    1 thanks

The Rogue | | Permalink

While I am sure my Directors will like the idea of paying £2k less (before Corporation Tax) I wonder how groups will be looked at.  We have three distinct trading companies with different reg numbers and different PAYE schemes.  There is a single non-trading holding company.  I have not been able to determine if the £2k will apply to each of our companies or if it will be split three (or even four) ways.

.

ireallyshouldkn... | | Permalink

/

At the margins

brian.barrett | | Permalink

It is a little unfair for those people who are stating that £2k is not a great amount.  Most government/budget proposals do only work at the margins.  The aim of the proposal is to encourage SMEs that the government, especially a majority Conservative one, feel are the powerhouse of the economy, to take on more staff.  It clearly will not encourage an employer to suddently employ 1 more person, but it may tilt the balance between someone who is thinking about it or, indeed, is thinking about not replacing someone or getting rid of someone.
Ayjay3 does correctly state that after corporation tax this is worth only £1,600 but the aim is not to give that money to the company/owner, rather to encourage them to take on extra staff!

Employer's NIC a massive disincentive to hire staff

sue.hill | | Permalink

This will help.  I would consider taking on an assistant once this is implemented!!!

Missed the point    7 thanks

norstar | | Permalink

Anyone who trumpets this as a major boon for "small business" needs to remove their rose tinted glasses.

It's like kicking and beating a person until they're lying on the floor, then saying "hey! Here's a stimulus for you!" and giving them a plaster.

Small business has been repeatedly battered by increasing amounts of red tape, gleefully enforced by HMRC (and I suppose Companies House) with a punitive penalty system. It's now harder than ever to run a small business without facing problems.

The latest is RTI. I rest my case.

So to now say "we're doing this for small business - hooray!" and give people a £2k NI break - well, thanks, but I'd really rather you binned RTI, amalgamated NI/tax thresholds and genuinely eased off small business red tape...

TomMcClelland's picture

Worthless to speculate...

TomMcClelland | | Permalink

Until the detail of the legislation is revealed it is probably useless to guess how this might work and how much it might end up being worth to various types of small businesses. Somehow I doubt that the framers will be wanting to allow OMB ltd consultancies to reap the benefit.

No stimulus for small businesses    3 thanks

AshBavalia | | Permalink

I cannot see how a £1600.00 NIC break after corporation tax will benefit small businesses and will allow them to take on more staff or grow their companies. It will certainly be of no discernable benefit to our small organisation.

Furthermore, the cut in corporation tax cuts applies to the main rate of corporation tax i.e. companies making profits above £1.5M. How many SME's does Osborne know that make above £1.5M in profit. At a net return of 10% an organisation would need to have a t/o of >£15M. This is not SME territory in my books.

Since 2010 the main rate of corporation tax i.e. for larger companies has fallen from 28% to what will be 20%. In the same time, the corporation tax rate for small profits i.e. below £300k has fallen by 1% to 20%. How on earth does this stimulate SME businesses??

An 8% cut in corporation tax for larger companies, for those that actually bother to pay corporation tax and not hiding the profits in the accounts and offshore, may help them but it does nothing for SME's.

Since SME's employ around 85% of the population, it is these organisations that probably provide the bulk of government revenue and so it is hardly surprising that not much has happened to reduce the tax burden for these organisations. However, it is very disingenuous to suggest that the budget will somehow stimulate the UK economy through the so called tax breaks for SME businesses.

£2000 nic sop

saudaagar | | Permalink

This measure would benefit those employers who pay at least £14,493 in gross wages. 

Optimum PAYE's picture

Let's get some perspective on Corporate Tax !

Optimum PAYE | | Permalink

It is always amusing when such conversations turn the focus onto Corporate Tax as the "Big" tax. This is not just a dig at the previous poster but at the many, many tax professionals out there that think tax starts and ends with corporate tax. And the many employers who are so focused on shaving 0.05% from their corporate tax liability that they miss the many £,£££s that can be saved by paying employees more efficiently or by having better control over things like staff expenses etc.

According to PwC figures yesterday, corporation tax generates 7.4% of the UK's tax revenues.Pretty small beer when compared to PAYE and Class 1/1A/1B NICs paid by employers/employees.

Whilst there is no doubt that it will take much more than this new Employment Allowance to make employing staff more affordable, let's not lose sight of the fact that it is better to get this "free" £2k in the budget (for all sizes of business) than having to spend an extra £2k (which is normally the case with budgets) and that this £2k is at least a step in the right direction.

 

 

Domestic employees

bernard! | | Permalink

Not had chance to look at the detail of the NI 'cut' yet, but how do we think it would affect those people who have domestic employees they are running a payroll for?

Everything I've seen suggests it's for all employers, so it would benefit those paying the likes of nannies.

Any thoughts

Offset and Cut

Kate Cottrell | | Permalink

 

The words in the statement are to "cut" £2000 from every companys NIC payments and the £2000 will be "offset" against every employers Class 1 secondary NICs from April 2014.  This suggests to me that you will be able to take up to £2000 off your employers NIC bill if you take on additional employees and will only benefit by £2000 if you are already paying at least this amount.  The devil will of course be in the detail so we will have to wait and see.

Struggle to see your conclusion

chEEK | | Permalink

Kate Cottrell wrote:

 

The words in the statement are to "cut" £2000 from every companys NIC payments and the £2000 will be "offset" against every employers Class 1 secondary NICs from April 2014.  This suggests to me that you will be able to take up to £2000 off your employers NIC bill if you take on additional employees and will only benefit by £2000 if you are already paying at least this amount.  The devil will of course be in the detail so we will have to wait and see.

I'm not sure where you read the word "additional" into anything that you quoted.

It sounds to me that a firm does its sums as usual and then subtracts £2000 from the employers NI before putting it through RTI (if the amount is <= 0 then no employers NI is due).

Any firm that already has employees will benefit as much as those that take on additional staff. Any firms that do take on additional staff will only benefit further if they were paying less than £2000 before doing so.

 

I agree with those who say that this is a bit of "tinkering", but it could be a step in the right direction in getting rid of employers NI. If they increase the threshold gradually then there may come a time when it can be abolished. By the time it gets to around £10-20k it will cover most SMEs and may remove the complications in one man band SMEs where dividends are attractive/essential to avoid a double taxation issue (and one that was rather brainlessly foisted onto even more one man band outfits by the advent of IR35). Expanding this far enough could provide the solution to that problem, albeit in a typical governmental tinkering way, adding complexity to arrive at fairness.

Clarification

chEEK | | Permalink

chEEK wrote:

It sounds to me that a firm does its sums as usual and then subtracts £2000 from the employers NI before putting it through RTI (if the amount is <= 0 then no employers NI is due).

Just to clarify - I wouldn't actually expect that the amount is subtracted BEFORE it is entered into RTI. It would almost certainly be a case of entering the figures in the normal way and then the reduction is applied. The exact mechanics of how this is done in the RTI software and the way in which this is shown to the user will likely depend on the rules, design choices etc.

IR35 tax terror ended for small/independent consultant at last?    1 thanks

dstickl | | Permalink

chEEK wrote:

Kate Cottrell wrote:

The words in the statement are to "cut" £2000 from every companys NIC payments and the £2000 will be "offset" against every employers Class 1 secondary NICs from April 2014.  This suggests to me that you will be able to take up to £2000 off your employers NIC bill if you take on additional employees and will only benefit by £2000 if you are already paying at least this amount.  The devil will of course be in the detail so we will have to wait and see.

I'm not sure where you read the word "additional" into anything that you quoted.

It sounds to me that a firm does its sums as usual and then subtracts £2000 from the employers NI before putting it through RTI (if the amount is <= 0 then no employers NI is due).

Any firm that already has employees will benefit as much as those that take on additional staff. Any firms that do take on additional staff will only benefit further if they were paying less than £2000 before doing so.

I agree with those who say that this is a bit of "tinkering", but it could be a step in the right direction in getting rid of employers NI. If they increase the threshold gradually then there may come a time when it can be abolished. By the time it gets to around £10-20k it will cover most SMEs and may remove the complications in one man band SMEs where dividends are attractive/essential to avoid a double taxation issue (and one that was rather brainlessly foisted onto even more one man band outfits by the advent of IR35). Expanding this far enough could provide the solution to that problem, albeit in a typical governmental tinkering way, adding complexity to arrive at fairness.

Agreed, this is good if it means that the IR35 tax terror is now to be ended for small/independent consultant at last. But does it? Perhaps the PGC can make progress here.  

Let us hope that the PCG now starts to push hard to open this apparently opening door, in order to stimulate UK economic growth by the unlocking of experienced intellectual capital that's apparently held back due to not wishing to risk a "Revenue run in" due to the uncertainty of the nasty IR35 legislation of an increasingly allegedly proven "nasty new Labour Party", which IMHO - by their actions on tax, Iraq, education etc - wished to encourage immigration by holding back indigenous British people from "British jobs ..." to quote GoBro. 

Another one for the Office of Tax "Complication"!

Colin Lothian | | Permalink

Yes, why not add yet another layer of complication for every payroller in the UK! 

The Office of Tax Simplification welcomes your views and can be contacted at ots@ots.gsi.gov.uk.

 

Whilst all views and ideas will be very gratefully received, we cannot  commit to respond to every suggestion. As fast as the OTS trys to undo the mess the government adds more layers of pointless legislation.

PCG? Don't hold your breath    2 thanks

chEEK | | Permalink

dstickl wrote:

Agreed, this is good if it means that the IR35 tax terror is now to be ended for small/independent consultant at last. But does it? Perhaps the PGC can make progress here.  

Let us hope that the PCG now starts to push hard to open this apparently opening door...

While I'd like to share your optimism, I'm wary of the reality and the history in this area.

Unfortunately the PCG have a history of one own-goal after another. The latest being the IR35 Forum which was set up after they proposed the nonsensical business entity tests (BETs), which Osborne jumped at since they gave him a way out of a quandary where he had few realistic choices outside of 'abolish or do nothing' - the other choices being complex adjustments.

Those BETs were total, complete and utter stupidity by the PCG IMO. Particularly in view of the fact that their membership did not hear Word One of this until it had been put forward as the official PCG submission!

 

I see even the latest nonsense in the IR35 Forum is that some bright spark asked if dividends should be reported via RTI. That was never suggested, so why ask? Now HMRC have gone off to decide on the matter. These people are simply vested interests, dreaming up ways to make life harder for SMEs so that they can be part of the "solution" - the only solutions that are ever forthcoming involve an on-going income for them, of course.

 

The fact is that the PCG have never really understood IR35. Many of their officials reject the idea that employers NI is the real problem - it's difficult to know if they really are that lacking in the required grey mater, or if they simply wish to defend the dividend route because they feel that they should somehow be exempt from paying the employees NI (or Class2/4 NI) that other working people pay.

However, since they say that they would accept a solution whereby a sole trader status were possible, it seems that it must be the former. And that is very worrying. So I'm not holding out much hope that the PCG will suddenly start getting anything right any time soon - I believe that they've become one of the vested interests along with contract reviewers, discussion forum sites and other web site proprietors who make up the IR35 Forum.

@chEEK: Is the only group left that of UKIP, as others R vested?

dstickl | | Permalink

chEEK wrote:

dstickl wrote:

Agreed, this is good if it means that the IR35 tax terror is now to be ended for small/independent consultant at last. But does it? Perhaps the PGC can make progress here.  

Let us hope that the PCG now starts to push hard to open this apparently opening door...

While I'd like to share your optimism, I'm wary of the reality and the history in this area.

Unfortunately the PCG have a history of one own-goal after another. ....

I've "thanked" your detailed post above, but I'd like to ask you this question: 

If PGC has been shown to be unable to make sensible progress - as you've evidenced - then who can? Is the only group left that of UKIP, because all the others have now become alleged vested interests?

silicondale's picture

Pointless tax giveaways?    1 thanks

silicondale | | Permalink

If the government is so short of money that it has to squeeze all the departmental budgets until the pips squeak, and cannot withdraw the unjust and ill-conceived 'bedroom tax' because it needs every penny - why is it even thinking of tax reductions like this one? Austerity should mean austerity!

Who benefits from these reductions, anyway? CT to 20% - big companies. Mortgage incentives - people rich enough to consider buying houses. Employer's NIC - employers, all, large and small. It doesn't benefit just the SMEs. It's an inefficient blanket tax reduction, given to those who need it and those who don't. Fuel escalator - those who can still afford to drive cars. Reduction in top rate of income tax from 50 to 45% - millionaires. The only one that conceivably helps the ordinary 'hard working' person is the 1p off beer - which is most unlikely to be passed on and is counter to the PM's own stated intent of increasing alchohol pricing.

Looking at the budget in the round, there may be some small positive spinoff for really small businesses, but this is really a set of tax cuts for the rich to help them through the tough times ahead. It's cynical and immoral to scrape together enough cash to offer tax cuts and mortgage incentives to business and the rich, while refusing to withdraw the real and damaging welfare cuts like the so-called 'bedroom tax'. Dressed up as a welfare "reform", this is a real tax because of the lack of appropriate housing to allow people to move to (and indeed why should they be coerced to move from their homes anyway?) - and the answer is to build council houses without any thatcherite 'right to buy' which is what has caused such a problem in provision of social housing.

What on earth is the government doing, cutting taxes anyway? It needs money, it can't or won't borrow more (fair enough), and services have already been cut to the bone. Efficiency savings can always be made, but as the chancellor found these are just the end-of-year pennies from the Whitehall office floors. Why not an honest increase in the main and higher rates of income tax - and keep the top rate at 50%?  When I started work 45 years ago, basic income tax was at 30% and we accepted it as normal. So what would be so wrong about a 4-5p increase in the two main income tax rates - and stop tinkering with these sneaky little tax cuts here and there that benefit the chancellor's rich friends?

You cannot be serious    2 thanks

chEEK | | Permalink

silicondale wrote:

If the government is so short of money that it has to squeeze all the departmental budgets until the pips squeak, and cannot withdraw the unjust and ill-conceived 'bedroom tax' because it needs every penny - why is it even thinking of tax reductions like this one? Austerity should mean austerity!

Who benefits from these reductions, anyway? CT to 20% - big companies. Mortgage incentives - people rich enough to consider buying houses. Employer's NIC - employers, all, large and small. It doesn't benefit just the SMEs. It's an inefficient blanket tax reduction, given to those who need it and those who don't. Fuel escalator - those who can still afford to drive cars. Reduction in top rate of income tax from 50 to 45% - millionaires. The only one that conceivably helps the ordinary 'hard working' person is the 1p off beer - which is most unlikely to be passed on and is counter to the PM's own stated intent of increasing alchohol pricing.

Looking at the budget in the round, there may be some small positive spinoff for really small businesses, but this is really a set of tax cuts for the rich to help them through the tough times ahead. It's cynical and immoral to scrape together enough cash to offer tax cuts and mortgage incentives to business and the rich, while refusing to withdraw the real and damaging welfare cuts like the so-called 'bedroom tax'. Dressed up as a welfare "reform", this is a real tax because of the lack of appropriate housing to allow people to move to (and indeed why should they be coerced to move from their homes anyway?) - and the answer is to build council houses without any thatcherite 'right to buy' which is what has caused such a problem in provision of social housing.

What on earth is the government doing, cutting taxes anyway? It needs money, it can't or won't borrow more (fair enough), and services have already been cut to the bone. Efficiency savings can always be made, but as the chancellor found these are just the end-of-year pennies from the Whitehall office floors. Why not an honest increase in the main and higher rates of income tax - and keep the top rate at 50%?  When I started work 45 years ago, basic income tax was at 30% and we accepted it as normal. So what would be so wrong about a 4-5p increase in the two main income tax rates - and stop tinkering with these sneaky little tax cuts here and there that benefit the chancellor's rich friends?

It doesn't really work as you suggest. The economics work like this:

1. Cutting corporation tax rates makes doing business in this country more attractive to multinationals who can choose where to pay their taxes.

2. Cutting employers Ni rates makes it easier for firms to take on staff, which leads to more jobs. And that's a good thing.

Employers NI probably seemed a good idea to someone back in the mists of time, but since the world became a global market, it became very obvious that it is ludicrous to impose a tax on employing workers who are based in Britain. That is a part of the reason why outsourcing happens so much - not only that Indians etc work for lower salaries in their pockets, but also employers NI means that it's 14% more expensive to employ someone living and working in the UK even if they worked for the same pay. Crazy.

 

Before you get money into peoples' pockets you have to get them work. And to do that you have to enable them either to run their own business, or to be employed by someone else's business. The budget was a good start, although there's a long way to go. And while we have socialist propaganda trying to make all the "have nots" jealous of anyone who has anything, and giving it sweet-sounding names like "social justice" (and while we have a population who are gullible enough to believe that that is any kind of solution)... we will continue to decline - since popular opinion, however misguided, constrains the actions of politicians.

 

N.B. It' also true that to get people into work they have to have the skills/qualifications and attitude. Too many these days don't have any of those - and it's always someone else's fault and it's their "right" to have someone else pick up the bill for them doing nothing, often for the whole of their life, because they find the work available to them in some way demeaning, calling it an "immigrant job" or some such term.

 

The so-called "bedroom tax" is well-conceived - people who live on benefits or in social housing are living on other peoples' incomes. That is what it is, no matter how much you de-personalise it by using terms such as "state funded" or "benefits", as if this money comes from a magic well in the Treasury's back garden. When people are in that situation, they are living beyond their means at others' expense. They should accept that and be grateful for having as much space as they need, while they need it, and no more for no longer.

 

And raising income tax to continue to do this? Are you serious??? Just how much of peoples' income do you think the state should be able to give to other people so that they can continue to do nothing?

I'd like to think that your post was some kind of joke, but there's been governments who have forced us to live that joke, so you were probably serious. God help us.

Yes, but lobbying groups distinct from political parties

chEEK | | Permalink

dstickl wrote:

chEEK wrote:

dstickl wrote:

Agreed, this is good if it means that the IR35 tax terror is now to be ended for small/independent consultant at last. But does it? Perhaps the PGC can make progress here.  

Let us hope that the PCG now starts to push hard to open this apparently opening door...

While I'd like to share your optimism, I'm wary of the reality and the history in this area.

Unfortunately the PCG have a history of one own-goal after another. ....

I've "thanked" your detailed post above, but I'd like to ask you this question: 

If PGC has been shown to be unable to make sensible progress - as you've evidenced - then who can? Is the only group left that of UKIP, because all the others have now become alleged vested interests?

Yes that's the feeling I get, the old parties have become so politicised that anyone that "tells it like it is" is a breath of fresh air. So much of what UKIP stand for is just plain common sense.

However, on the specific issue of IR35, although UKIP may now be the only party that might have the stomach to change this, I believe that the party/political issue (UKIP etc) is distinct from the lobbying issue (PCG etc). In that respect I think there needs to be a new lobbying group taking a fresh approach to the interests of SMEs. The PCG has its own history that obstructs progress on these issues - primarily an entrenched position based on poor understanding of the issue - but SMEs shouldn't need to reform groups that are supposed to be acting in their interests before going on to the real business of persuading the government/parties. Why bother? Just form a new group, attract members and the old group dies off.

 

If the right argument were put forward it may be possible to convince any of the political parties (other than Labour, who introduced it), but the current coalition parties will feel that they have already looked at this recently so it is likely that UKIP are the only party that may be prepared to look at it afresh.

Some sense at last    1 thanks

brian.barrett | | Permalink

ChEEK has clearly put the point of the £2,000 - and has actually stuck to the point of it but opened up issues that are not the subject of this thread.

The clear aim of the money is not to increase profits [directly] for any company, but rather to encourage companies to take on additional staff.  Hopefully profits will increase because if the company's sums have been done correctly, the extra employee(s) will cover their costs and more.

Anyother annoying issue of these threads is that respondents try and take the opportunity to solve all ills of the world and to castigate useful steps that have been taking in solving some of th ills because they do not solve all of them.

It should be recognised that the £2,000 will help at the margins and that governments are [hardly ever] in the position to fix all issues.  We should always be warey of large changes to the tax system taken in 1 step as they can have unexpected consequences.  It is correct that steps should not be too large.

Yes seriously!

AshBavalia | | Permalink

Sticking to the point of this thread, the cut in Employers NIC of £1600.00 will NOT make it easier for my business to take on new employees and I very much doubt it will help any other companies either, maybe with the exception of one man bands! Therefore, its intended purpose i.e to stimulate the economy via SME businesses will NOT work. It is completely disingenuous to suggest otherwise!

With regard to the corporation tax cut, it does not apply to SME businesses and therefore, again, it's intended purpose to stimulate the economy via SME businesses will not work!

The idea therefore that any element of the budget will stimulate the UK economy via SME businesses is complete nonsense and disingenuous. So, there we have it!

@AshBavalia:Generalising from it's not 4 U 2 the wider UK is ...

dstickl | | Permalink

AshBavalia wrote:
Sticking to the point of this thread, the cut in Employers NIC of £1600.00 will NOT make it easier for my business to take on new employees and I very much doubt it will help any other companies either, maybe with the exception of one man bands! ... The idea therefore that any element of the budget will stimulate the UK economy via SME businesses is complete nonsense and disingenuous. So, there we have it!
Hi AshBavalia! In my humble opinion (IMHO) your stance of apparently generalising from your apparent opinion of it's [the excellent £2000 pa total cut in EmployERs' NICs] not for you, to the wider UK economy, is IMHO revealing of a narrow and/or neglectful approach that sadly ignores the urgent need to tweak economic sentiment about possibilities of future economic growth by some UK other stakeholders. 

QUESTION: Do you wish to discourage future competition to your business from future economic growth by some other stakeholders in our UK economy?

Don't let the facts get in the way

chEEK | | Permalink

AshBavalia wrote:
Sticking to the point of this thread, the cut in Employers NIC of £1600.00 will NOT make it easier for my business to take on new employees and I very much doubt it will help any other companies either, maybe with the exception of one man bands! Therefore, its intended purpose i.e to stimulate the economy via SME businesses will NOT work. It is completely disingenuous to suggest otherwise! With regard to the corporation tax cut, it does not apply to SME businesses and therefore, again, it's intended purpose to stimulate the economy via SME businesses will not work! The idea therefore that any element of the budget will stimulate the UK economy via SME businesses is complete nonsense and disingenuous. So, there we have it!

1. No-one suggested that the cut in CT was intended to stimulate SMEs (including the Chancellor). It was clearly stated that it is to discourage multi-nationals from setting up their businesses in countries other than the UK - or paying their taxes elsewhere. Please read more carefully.

2. Of course a reduction of £2k in employers NI WILL make it easier for small businesses to take on employees. Note: It is £2k not £1.6k because it is not reasonable to assume that the £2k would otherwise be taxable profit - for example, the money saved could be used for investment and therefore not subject to tax.

It has been clearly noted that it is the equivalent of being able to employ 4 people at minimum wage or one person at £22k without paying NI. How can that not be an incentive to any small firm considering taking on staff (but deterred by the cost, as many are)?

This is simple arithmetic - to suggest anything else is, in fact, ridiculously disingenuous. But... I suspect that you already know that.

NIC allowance

Chrisdy34 | | Permalink

And where will the money come from to pay for this?                                                                                                                                                    From fines imposed for late RTI filing @£100 per month for small employers from April 2014

Septimus's picture

Am I simple?

Septimus | | Permalink

I thought this was an attempt to stimulate the economy – or is this a too simplistic way to look at it? Most of the posts on this string have been tax based, what of the fact that all businesses with a payroll will now have £2,000 that they can spend in whatever way they want.  There must be a compound effect on the business and hence the wider economy of the country.

Or have I missed something?

SSP

puzzledcat | | Permalink

Is this not just a trick also to take employers' mind off the PTS end?

I quote from the Sage year end booklet:

" From 6 April 2014, the percentage threshold Scheme (PTS) ends, meaning you can no longer recover any SSP paid to employees after that date.

However, to help businesses manager absence costs, the government is introducing employment allowance from April 2014. It gives businesses and charities up to a £2000 reduction in their NI bill for the tax year..."

hmmm