National insurance legislation
HMRC have published a reminder to advise employers that The National Insurance Contributions Act 2011 received Royal Assent on 22 March 2011.
The Act contained two important measures.
The first measure made the necessary provisions to allow for the increase in the rates of national insurance contributions (NICs) from 6 April 2011. This resulted in a 1% increase in NICs rates from 6 April 2011:
- The main rates of Class 1 NICs (paid by employees) and Class 4 NICs (paid by the self-employed) increased to 12% and 9% respectively.
- The Class 1 employer rate of NICs increased to 13.8%. This increase also applies to Class 1A and Class 1B NICs
- The additional rates of Class 1 (paid by employees) and Class 4 (paid by the self-employed) NICs increased to 2%.
The second measure related to the regional employer NICs holiday for new businesses. As the Act has now received Royal Assent employers can apply to use the scheme without concern that the criteria might change. The NICs holiday scheme is designed to help new businesses in qualifying regional areas to create jobs, by reducing the costs of employing staff. The scheme is only open to qualifying new businesses outside London and the South East. The scheme operates by allowing a deduction against the amount of Class 1 NICs that a qualifying employer is required to pay to HMRC each month or each quarter. The scheme which was officially introduced on 6 September 2010 runs from the original date of the announcement on 22 June 2010 until 5 September 2013.