Figures out last week revealed that the introduction of the Employment Allowance in April and the Government’s pledge to cut employers’ National Insurance contributions (NICs) will save nearly £5.5 billion per year for employers by the end of the Parliament, the equivalent of around £200 per employee.
The savings to businesses also come from the abolition of employer National Insurance for employees under the age of 21 from April 2015 and raising the threshold before a business starts paying National Insurance for an employee.
To mark the fact that it is only three months before these changes come into effect, the Chancellor, George Osborne, visited two small firms that will benefit from their introduction.
As a result of the Employment Allowance, one of them, a café that employs two people, will see its employer NICs bill completely wiped out, while the other, a garage employing nine people including an apprentice, will be able to benefit from the full £2,000 allowance and, as a result, will see its employer NICs bill reduced by 25 per cent.
Speaking after his visits, the Chancellor said that small firms make a vital contribution to the economy, creating jobs and stimulating growth. He added that the ones he visited want to expand, take on new staff and make new investments so the Government’s actions to cut the jobs tax will be a real boost to them.
Mr Osborne added that the Employment Allowance will help these businesses achieve their goals and help the UK succeed in the global race, as it is effectively providing cash back on jobs.
He concluded by saying that, with three months to go until the introduction of the Employment Allowance, he was “shining a spotlight” on the scheme, which he believes demonstrates the Government’s support for small businesses and enterprise.