NICs – more questions than answers

Graham Chase, Tax Partner, CMS

Widely anticipated by the newspapers, the Chancellor has announced a targeted NICs holiday of up to £5,000 for each of the first ten employees hired by new employers outside London, the South East and Eastern regions.  Details of this three year incentive are yet to be revealed, but the scheme should be up and running by September. New businesses set up from today will benefit from the scheme – they will simply have to wait for the scheme to be up and running before any benefits can be claimed.

A number of questions arise:

1. How will the scheme apply to employees with more than one place of work, only one of which is in the qualifying region?

2. There must be a new business. Can a transfer of an existing business qualify if it is acquired by a new employer? If so will there be anti-avoidance rules to prevent transfers to new companies established to benefit from the incentive?

3. What happens in the event that employees leave in the first 12 months – can unused relief by transferred to a replacement employee?

4. If the relief applies on a first in basis then does this mean that employers should hire higher paid workers first, so as to gain the maximum benefit?

More details are promised from HMRC “shortly”.

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