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Osborne to give NI tax breaks to start ups

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21st Jun 2010
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New businesses outside London and the South East won't have to pay National Insurance for their first 10 employees under a new scheme to be unveiled in Tuesday's Emergency Budget.

The tax break, which is worth up to £50,000 for 400,000 businesses, is expected to last three years and will allow businesses to avoid NI for 12 months.

Chancellor George Osborne has refused to comment on the initiative but it was a proposal included in the Conservative Party's election manifesto and several media outlets are reporting it will be included in the Budget announcement next week.

According to The Guardian, the action is designed to boost private sector jobs and is being targeted at UK regions with a high concentration of workers employed by local or national government which makes them more vulnerable to public sector cuts.

The Emergency Budget is set to be dominated by public sector cuts and tax hikes, such as an increase to non-business capital gains tax, but the NI scheme is one of several which Osborne looks set to include in an attempt temper the austerity measures. Among the others are the scrapping of Labour's planned increase to employers' National Insurance Contributions and a five year "road map" to cut corporation tax.

Speaking on the BBC's Andrew Marr Show on Sunday morning, Osborne denied claims about the "badness" of his Budget. "I don't see it as badness, I see it as decisive action to deal with Britain's record Budget deficit," he said.

"We sit here as the country in Europe with the largest Budget deficit of any major economy at a time when markets and investors and business are looking around the world at countries that can't control their debts.

"And so we've got to deal with that. In that sense it's an unavoidable Budget, but what I'm determined to do is to make sure that the measures are tough but they're also fair and that we're all in this together and that, as a country, we take the steps necessary to actually provide the prosperity for the future."

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