The National Insurance Contributions Act 2011 received Royal Assent on 22 March 2011. A copy of the Act and a copy of the Explanatory Notes to the Act can be found by following the link below:
The Act contains two measures:
These measures are part of a wider package which, relative to previous plans, reduces the burden of taxation on labour in a way which benefits low earners. The package achieves this by increasing thresholds rather than cancelling the planned rate rises. This Bill therefore provides for the rate rises, while the threshold rises are implemented via other legislation. The changes contained include the following:
This measure is aimed at encouraging the creation of private sector jobs in regions reliant on public sector employment, through reducing the cost to new businesses of employing staff.
It is intended that during a three year qualifying period, new businesses which start up outside of three excluded areas will get a substantial reduction in their employer National Insurance contributions. Within the qualifying period, these employers will not have to pay the first £5,000 of Class 1 employer National Insurance contributions due in the first twelve months of employment for each of the first ten employees hired in their first year of business.
The scheme started on 6 September 2010. Any new businesses set up from 22 June 2010 which meet the eligibility criteria set out in the draft legislation are also intended to benefit from the scheme. Within the UK the scheme is intended to apply in Scotland, Wales, Northern Ireland and the English regions of the North West, North East, Yorkshire and Humber, West Midlands, East Midlands and South West.
Bill and Explanatory Notes on the Parliament website (Opens new window)
FAQs in respect of Regional employer NICs holiday for new businesses (PDF 46K)
