New National Insurance legislation
The First Reading of the Government’s National Insurance Contributions (NICs) Bill took place on 14 October 2013 and the Bill completed its committee stage on 21 November 2013. The Bill will legislate for the new employment allowance and also includes a number of other measures including changes for certain oil and gas workers on the UK continental shelf and the repeal of two redundant Class 4 NICs reliefs. The draft regulations are expected to come into force from 6 April 2014.
In the 2013 Budget, the Chancellor announced the introduction of an employment allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs bill from April 2014. The allowance will be claimed as part of the normal payroll process through RTI. It is estimated that this change will remove up to 450,000 small businesses from having to pay National Insurance Contributions.
At the time the measure was announced, the Chancellor commented that ‘For the person who’s set up their own business, and is thinking about taking on their first employee – a huge barrier will be removed. They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax’.
More details on how to claim the Employment Allowance will be made available in early 2014.