Only yesterday we reported on the possible lack of prospects facing umbrella company contractors due to cuts in public sector funding. Chief executive of Hays, Alistair Cox, suggested there would be further opportunities for contractors within the private sector if the government extended their NIC relief.

While Cox accepted that this was unlikely due to the effect on the public purse, the NIC holiday announced in the Emergency Budget for start up businesses is due to commence on 6th September. However, there have been concerns that the scheme will fail to make an impact in the areas most in need of the relief.

The scheme is only open to start ups that began trading between 22nd June 2010 and the 5th September 2013. They must be located outside Greater London, the South East and the UK’s Eastern regions to receive the exemption from national insurance contributions in their first year.

However, these conditions have been met with some criticism. Accountants UHY Hacker Young stated that the excluded areas actually host some of the most deprived localities in the UK. They will therefore miss out on this vital support.

UHY Partner, Roy Maugham, stated: “By restricting the scheme to regions outside London and the South East, the government is denying invaluable NICs savings to many of the businesses that would need them the most.”

On the contrary, the British Chamber of Commerce has welcomed the scheme stating that it is only workable when it is specific to certain regions. David Frost, BCC Director General commented: “There’s limited money and we need to stimulate growth and employment in the Midlands and the North. We can see the real benefit of targeting.”

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