Overview

This National Insurance Contributions Bill increases National Insurance rates for both employers and employees and introduces a temporary regional holiday on secondary Class 1 contributions for new businesses outside of Greater London, the South East, and the East of England.

Description

Increased National Insurance Rates

The bill raises Class 1 (employee and employer) and Class 4 (self-employed) National Insurance contribution rates. Specific percentage increases are detailed in the bill's clauses. The destination of additional rates paid into the National Insurance Fund is also altered.

Regional Secondary Contributions Holiday

The bill provides a temporary holiday on secondary Class 1 National Insurance contributions for new businesses. This holiday applies to qualifying employees of new businesses established outside Greater London, the South East, and the East of England, between June 22nd, 2010 and September 5th, 2013. The holiday covers up to £5,000 in secondary contributions per qualifying employee (up to 10 employees). Businesses are eligible to apply to either deduct the holiday amount from future payments or receive a refund. Strict rules are in place to prevent abuse of this scheme. The bill defines "new business", "qualifying employees", "holiday period", and other related terms.

Government Spending

The bill increases government revenue through higher National Insurance contributions. The regional holiday for new businesses represents a reduction in government revenue, but the overall net effect on government spending is an increase. Precise figures are not provided in the bill text.

Groups Affected

• Employees: Will pay higher National Insurance contributions.
• Employers: Will pay higher National Insurance contributions.
• Self-Employed Individuals: Will pay higher Class 4 National Insurance contributions.
• New Businesses (outside specified regions): May benefit from a reduction in secondary Class 1 National Insurance contributions for up to 10 qualifying employees, subject to meeting specific criteria.
• HMRC: Responsible for administering the changes in contribution rates and the regional holiday scheme.

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