Employment Allowance to provide £5.5bn boost

Tax Comments Off on Employment Allowance to provide £5.5bn boost

In the run up to the introduction of the Employment Allowance – which will reduce every employer’s national insurance bill by £2,000 – HMRC has released new figures about how much the scheme could save UK businesses and charities.

The Government estimates that the tax cut will mean employers are nearly £5.5 billion better off per year by the end of Parliament in 2015. This is the equivalent of £200 per employee.

The savings come from three main areas:

  • The new Employment Allowance taking effect from April this year
  • The abolition of employer national insurance for employees under the age of 21 from April 2015
  • Raising the threshold before a business starts paying national insurance for an employee in April 2011.

Visiting small businesses to mark the countdown to the introduction of the Employment Allowance, Chancellor George Osborne said:

“Small businesses make a vital contribution to our economy, creating jobs and stimulating growth. The ones I have visited today want to expand, take on new staff and make new investments so the actions we have taken to cut the jobs tax will be a real boost to them.

“Effectively providing cashback on jobs, the Employment Allowance will help these businesses achieve their goals and help the UK succeed in the global race.”