On Monday, Shadow Chancellor George Osborne announced plans to waive employers’ national insurance contributions for any businesses starting up within the first two years of the Conservatives taking office, if they win. This concession will apply only to the first ten members of staff taken on by each of these new companies.

With regards to how this may effect contractors, tax experts have commented that this move is unlikely to be of benefit. As it stands employers’ NI contributions are levied at 12.8% of the employee’s salary. While a contractor working through a limited company must pay these contributions on his own salary and anyone else he employs, questions have been raised as to whether or not said contractor could wind up this limited company and set up a new one.

However, experts have been quick to denounce this idea. Speaking to Contractor UK, Tony Harris from Contractor Money, said: “In reality this will only benefit those contractors who are currently inside of IR35. IN almost all cases, anyone outside of IR35 would be likely to draw a low NI-able salary in the first place so this news will be largely irrelevant for them.”

He continued: “It’s also my understanding that Osborne made no mention of scrapping the planned increased in employers’ NI contributions (which are set to rise by 0.5% from 2011) so current contractors will have little to cheer about from this announcement.”

Meanwhile, PCG policy adviser, George Anastasi stated to Contractor UK: “Our understanding is that this is a measure designed to increase employment and incentivise businesses to take on new staff. Therefore we are not sure this is intended to be of benefit to freelancers, or that it will apply to new freelancers. Naturally, we are seeking further clarification on this, but we don’t at present believe it will apply to our members.”

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