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Make it wider
If the objective of the measure is to create employment outside of London and the South East, then it should be an easy job to allow existing businesses (with less than 10 employees), as well as new start-ups, to take advantage of the relief. It should also be possible to devise anti-avoidance rules to prevent abuse of the relief (e.g. phoenix start-ups). After all, it is more likely that existing small businesses will seek to expand their operations (and hence the number of employees) than brand new start-ups (which by experience take longer to get going). If the major reason for the relief is to create employment why exclude existing businesses? Also, on a cynical note, is the relief merely targeted at those civil servants who might lose their jobs and create new businesses which will then take over the activities which they have previously carried out? That is, new companies will be formed to sell their services to government/local government. They will receive the NIC relief (worth £50,000 over 5 years). It is likely that public spending will go up as result!!! For example, there is an announcement in the Budget that HMRC will begin to employ debt collection agencies to collect unpaid tax. If I was a tax collector, I would leave HMRC (or get made redundant with the added benefits), set up a debt collection agency, and sell my services to HMRC. I would receive up to £50,000 in NIC relief and be doing the same job as I was doing before - a net negative effect on the economy.
12 months or 36 months?
I think the holiday only apllies to employees taken on during the first 12 months rather than the 36 months suggested in the article. Isn't the 36 months the period in which new businesses could be set up?
That would be more consistent with the manifesto commitment.
Wider issue
I agree, I dont see why this is a black and white geographic benefit that you only are entitled to if youre outside the South East.
Small businesses across the whole of the UK need support at times like this as its them that are going to see us out of the recession over the next year or two and become stronger. How many small businesses fall into the trap of being based in London or the South East and what is that as a proportion fo the total SME's in the UK? quite significant I'd think.
However, its good news for small businesses so we should applaud it. many of my clients www.mybusinessfd.com will certainly welcome it.
Chris
New Nic exemption and what counts as "new"
Are there any indications at all as to what will constitute a "new business"? Anything in the trial they did? Since they are obviously looking for these new businesses to start straight away one assume normal commercial criteria could apply, ie something the business was not already engaged in and definitely not a Phoenix.
The potential here is in fact very good and correctly structured the savings could be a lot more than just up to £5,000 per employee.
Michael S Penn
Many startups start with self-employment, then grow
But I guess there is nothing here that would help a one-person-band ...