The manufacturing industry is set to benefit from a reduction of up to £2000 from its employer National Insurance Contributions Bill thanks a revamp in NIC regulation by HMRC.
The HM Revenue & Customs (HMRC) announced that up to 89,000 businesses in the manufacturing industry will benefit from its cutting of NICs.
The reduction is scheduled to take place in April 2014 thanks to the Government’s new Employment Allowance.
The HMRC estimated that over 90 per cent of the benefit of this allowance will go to businesses with fewer than 50 employees, clearly targeting small businesses.
“Small businesses are the lifeblood of our economy and we want to do what we can to support them,” said Exchequer Secretary to the Treasury David Gauke.
“The Employment allowance will reduce the cost of taking on new staff, supporting 89,000 businesses in the manufacturing industry, and hundreds of thousands more across the UK with an ambition to grow, by reducing the cost of hiring their first employee or growing their workforce.”
This means a business which employs one person on £22,400 will be exempt from paying employer NICs.
A business that employs five adults full-time on the national minimum wage will see a reduction in its employer NICs bill by over 80 per cent.
Estimates from HMRC suggest that around 19,000 businesses in the manufacturing sector who pay NICs of £2,000 or less will see its employers NICs disappear.
The allowance will be available annually, but businesses will need to confirm eligibility for the allowance through regular payroll processes.