This guide provides information relating to the Regional Employer National Insurance Contributions (NICs) Holiday for New Businesses.
Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due - for each of the first ten employees they take on.
The NICs you are entitled to withhold under the scheme do not have to be repaid at a later date.
The NICs holiday is voluntary - you do not have to take advantage of the scheme. If you decide not to apply or you do not meet the qualifying conditions, you must simply calculate Class 1 employer NICs in the normal way and pay them to HM Revenue & Customs (HMRC) with your monthly/quarterly payment.
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The NICs holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.
However, as the scheme itself didn't start until 6 September 2010, you can only deduct employer NICs due on earnings paid on or after that date (but before 5 September 2013).
You can only apply for the NICs holiday if your principal place of business is located within designated areas of the UK at the time your business starts up. The included countries and regions are:
In most cases, there should be little doubt about whether your business started up in a qualifying region, but in some instances your principal place of business may not be clear. If you cannot show that your business carries out most of its activities within one of the included regions when it starts up, then you will not qualify for the NICs holiday.
If you are unsure whether your business falls within a qualifying region, you can check by reading more about this in our guide on checking your business location.
Employer NICs holiday: checking your business location
If your business does not have an obvious principal place of business, for example if it is internet based or if it involves driving from one job to the next, the place where you keep your equipment, retain your business records or carry on the administrative parts of your business may be considered to be your principal place of business. The onus will be on you to demonstrate, if asked, that your principal place of business is within an included region.
If you have more than one place of business, your principal place of business will be the one where you carry out the greater part of your business. If your business is split equally between locations - one which qualifies and another which doesn't - the location you use as your administration centre/head office will be considered to be your principal place of business. If this is within an included region then you may be able to take advantage of the NICs holiday.
If your new business started up on or after 22 June 2010 and has its principal place of business outside the UK in another European Union country, please contact HMRC's New Employer Helpline.
Find contact details for HMRC's New Employer Helpline
The types of business that may be able to apply for the holiday are:
Managed Service Companies do not qualify for the holiday.
Where an employer within the intermediaries legislation, commonly referred to as IR35, meets the holiday qualifying criteria, they will be eligible for the holiday on the salary or wage payments they make. They will not be eligible for the holiday on income deemed to be earnings or employment resulting from the IR35 rules.
In most cases, it should be very clear that your new business is genuinely new. However if your business has, for example, recently changed ownership or was formerly part of another established business, then you'll need to confirm that it doesn't fall into one of the excluded categories before going on to apply for the holiday.
Check whether your business is considered to be new
If your business is eligible, the National Insurance contributions (NICs) holiday will run for 12 months after the date your business started.
During this time, the first ten employees you hire are potentially 'qualifying employees' for the purposes of this scheme. There's more about what this means in our guide 'employer NICs holiday: calculating and recording'.
This 12 month period is limited by the previously mentioned end date for this scheme, so employer NICs due on earnings paid after 5 September 2013 cannot be withheld, no matter when your business started.
For the purposes of the NICs holiday, the date your business started will be treated as being the earlier of:
If, exceptionally, your business started to trade on or after 22 June 2010 but you first hired an employee before 22 June 2010, your business will be treated as having started on 22 June 2010. Remember, if your business started to trade before 22 June 2010, it is not eligible for the NICs holiday.
Employer NICs holiday: calculating and recording
The employer NICs holiday is considered to be a 'de minimis State Aid'. This means there are certain European Commission regulations HMRC and those applying to benefit from this scheme are required to comply with.
It is anticipated that most new businesses starting up and wishing to take advantage of this scheme will qualify for this State Aid. However you must ensure that your business is not in one of the excluded sectors shown below before you make your application.
Some businesses do not qualify for de minimis State Aid and so cannot apply for the holiday. They are:
Certain sectors are entitled to a reduced rate of de minimis State Aid, as shown in the table below.
| Business sector | State Aid limit |
|---|---|
| Road transport - those not excluded as detailed above | €100,000 |
| Agriculture | €7,500 |
| Fisheries and aquaculture | €30,000 |
This means new businesses in these sectors may qualify for de minimis State Aid, but they will not be entitled to claim the full £50,000 limit available under the NICs holiday scheme.
Businesses within the agriculture sector will not be entitled to claim the NICs holiday if:
Read more detail on Annex 1 to the Treaty on the European Union website (Opens new window)
The applicable legislation is Commission Regulation (EC) No 1998/2006 of 15 December 2006. To read more about that follow the link below.
If you think your business meets the criteria for the NICs holiday, follow the link below to find out how to apply.
Employer NICs holiday: how to apply
If you have already made payments of employer NICs that you realise could have been withheld under this scheme, you first need to complete an application form to confirm your eligibility to take advantage of the NICs holiday.
The guide 'Employer NICs holiday: calculating and recording' explains how to work out the employer NICs that you are entitled to deduct from your monthly/quarterly payments to HMRC.
If you have not reduced the monthly/quarterly payments you have already made by the amount of NICs holiday due, you can simply reduce future monthly/quarterly payments to HMRC by that amount.
If you are not able to do this because the total amount you are due to pay to HMRC is less than the holiday deduction you are eligible to claim, you can write to your HMRC Accounts Office to apply for a refund.
Your application should contain the following information:
Employer NICs holiday: calculating and recording
If you have overpaid employers NICs at the end of the tax year, HMRC will refund any amounts due after receiving your Employer Annual Return (form P35 and form P14s) and your Employer NICs Holiday End of Year Return. You can read how to complete these forms by following the links below.
Employer NICs holiday - what happens at
the end of the tax year? (PDF 37K)
File your Employer
Annual Return: P35 and P14s
A new business has the right to appeal against the following decisions:
