Employer National Insurance contributions (NICs) up to £2,000 will be waived for all companies under new laws announced in the Queen’s Speech that also outlined the introduction of a flat-rate state pension.
The National Insurance Contributions Bill, first announced by Chancellor George Osborne in the Budget earlier in the year, is aimed at making it easier for small companies to take on new staff.
It will result in a third of employers – or around 450,000 firms – no longer paying NICs from April next year.
The Employment Allowance is permanent and open to all businesses and charities in the UK.
It will also be simple to administer, to ensure maximum take up. From April 2014, it will be delivered through standard payroll software and HMRC’s Real-Time Information system.
Employers will only need to confirm their eligibility through their regular payroll processes. This confirmation will ensure that up to £2,000 will be deducted from their employer NICs liability over the course of the year’s PAYE payments.
The Government will engage with business representative bodies on the details the new allowance, to ensure the system is as simple and effective as possible.
A new Pensions Bill that was also announced will introduce a flat-rate state pension worth about £155 a week from April 2016. This will replace the current two-tier system, which is made up of the basic state pension and second state pension.
The state pension age will also rise to 67 between 2026 and 2028, eight years earlier than planned.
The Queen’s speech is written by the government and delivered by the monarch. It outlines the legislation the government wants to pass through Parliament over the coming year.