The government scheme to allow certain employers a 12 month holiday from paying class 1 employers National Insurance contributions (subject to certain conditions) began on 6 September 2010.

The scheme has the potential to save the employer up to £5,000 per employee for the first 10 employees hired, subject to the following conditions:

• The business must be based in a qualifying location (explained below)
• The business must be considered as new according to the guidance issued and have started trading during the qualifying period
• The employees included must be hired within the first 12 months of business 

If you believe your business satisfies the qualifying conditions, you should contact HM Revenue and Customs to confirm your entitlement to join the scheme (you must not take advantage of the scheme before obtaining HMRC’s approval).

Locations covered

In order to qualify for the holiday, the business must be able to demonstrate that the principal place of business is in one of the following locations:

• Northern Ireland
• Scotland
• Wales
• East Midlands
• North East
• North West
• South West
• West Midlands
• Yorkshire and Humber

The principal place of business is where the majority of business activities are carried out.  If there is no one obvious place of business because it is internet based or the activities are carried out equally in numerous locations, the principal place of business will be deemed as the administrative base  i.e. where your paperwork is stored or meetings are held. 

If you are unsure which region your business falls into, there is a region finder on the Government office network website.  If your principal place of business is in another European Union country you should contact the HMRC New Employer helpline.

If you believe that your business meets the location criteria and would like further information on the new business and qualifying employee guidelines, please contact us.