Overview

This bill increases National Insurance rates and introduces a regional holiday on secondary Class 1 contributions for new businesses outside Greater London, the South East and the East of England. The increased rates take effect from April 6th, 2011, while the holiday applies from the date of the bill's passage.

Description

Increased National Insurance Contributions

The bill raises both primary and secondary Class 1 National Insurance contributions, and Class 4 contributions (for the self-employed). Specific percentage increases are detailed within the bill itself. Additionally, the portion of additional rates paid into the National Insurance Fund is reduced from 100% to 50%.

Regional Holiday for New Businesses

A temporary holiday is created on secondary Class 1 National Insurance contributions for new businesses established outside Greater London, the South East and the East of England. The holiday covers up to £5,000 in secondary contributions per qualifying employee for a limited period (June 22nd, 2010 to September 5th, 2013). A qualifying employee is defined as someone who began working for the business within the holiday period's first year and a maximum of ten qualifying employees can be claimed for. Businesses must meet specific criteria to qualify, avoiding businesses created primarily to take advantage of the tax break.

Government Spending

The bill is expected to increase government revenue through higher National Insurance contributions. While the regional holiday offers tax relief to new businesses, the overall impact is a net increase in government income. Exact figures on the projected revenue increase are not available in the provided bill text.

Groups Affected

• Employees: Will face increased National Insurance contributions (Class 1).
• Self-employed individuals: Will face increased Class 4 National Insurance contributions.
• New businesses (outside specified regions): May benefit from a reduction in secondary Class 1 National Insurance contributions, reducing their employment costs.
• HMRC (Her Majesty's Revenue and Customs): Responsible for administering the changes and handling applications for the regional contribution holiday.

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