Tory plans for a “jobs tax break” for new businesses have been announced by
shadow chancellor George Osborne, as part of a package he said would get Britain
back to work.
Osborne announced the plan in an unscheduled intervention at the Tories’
Manchester conference ahead of his keynote speech on the economy on Tuesday. He
said any new business started in the first two years of a Conservative
government would pay no employer national insurance contributions on the first
ten employees it hires in its first year.
He estimated this would help create 60,000 new jobs. The tax amounts to 12.5%
on the salaries of employees up to £844 a week per employee of £44,000 a year.
For a new small business with an average salary of £25,000 this could save
£25,000 a year.
The relief would be limited to new trading businesses operating for
commercial purposes with provisions to prevent exploitation and avoidance using
parallel trade rules. It would not apply to participators in the business and
exclude associated businesses of existing firms and relatives.
John Cridland, CBI Deputy Director-General, said: “Many business people are
put off hiring their first employee by the sheer level of taxes and red tape,
particularly at this time. This proposal should help new firms take bolder steps
in creating jobs, and would give a much-needed boost to UK entrepreneurs looking
to grow a business.”
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