Why are firms reluctant to take up the NIC holiday scheme?

Accountants may not be the only people to wonder why more businesses aren’t taking advantage of the National Insurance holiday scheme. Although take up has improved slightly, it is still way below the original estimate from HM Treasury.

David Gauke, the exchequer secretary to the Treasury, said in parliament last week that HMRC has conducted some research into the scheme and discovered that awareness was lower than had been expected. He went on to explain that eligible employers could benefit by hiring more staff and growing their business.

The holiday allows new start-ups to get relieve on NICs for new hires during their first six months in operation. The relief was introduced by George Osborne in his first Budget and it was thought that up to 132,000 firms a year would take up the scheme.

However, latest data shows that only 5,137 applications have been successful since last September and 163 have been turned down. In June, 551 companies made a successful application, down from 828 in May.

Small businesses in the UK are continually saying they need government help to grow their company and yet they seem reluctant to take advantage of a scheme that can help. Admittedly the holiday is only available to employers in certain parts of the UK, but those that are eligible could save up to £50,000. Surely it’s worth applying!

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