National Insurance and Company Formation

From the moment the Coalition Government announced its Emergency Budget, it became clear that one of their main objectives was to support small regional businesses and company formation.

When the previous administration announced its plans to increase National Insurance, the SME sector was up in arms. Many small business owners could not understand why the government, which had always said that it recognized the importance of an enterprise led recovery, was choosing to introduce a tax which would make hiring more employees much more expensive.

At the time, the Conservative party slammed Alistair Darling’s plans. Therefore, once the coalition government came into power, the majority of the SME sector expected them to overturn the previous government’s plans to increased National Insurance.

While they did not reduce National Insurance for businesses in the south and south west they did devise a policy whereby recently formed regional companies would be eligible for a ‘National Insurance Holiday’.

Christopher Thomas, spokesperson for the FSB, comments; “This new legislation which entitles businesses which completed the company formation process on or after June 2010 a National Insurance break on their first ten employees, will provide a welcome boost both to company formation and enterprise.”