THE GOVERNMENT’S National Insurance holiday scheme has cost twice as much in administration fees as it has saved new businesses, Labour has claimed.
As reported by Accountancy Age, only 10,000 businesses have taken up the scheme in its first year, which offers a tax break for the first staff hired by new companies. This is way below the 132,000 a year figure originally estimated by the Treasury and the 400,000 companies expected to benefit in the three years the scheme is due to run.
Labour has claimed that the Treasury’s own figures show that the administration costs of the scheme so far were £12m, double the £6m saved by businesses.
Shadow Treasury minister Owen Smith said: “The one flagship policy that could have made a difference has been a total flop, supporting just one in forty businesses who were promised help.
And shockingly, the government is set to spend twice as much on admin costs than it has so far paid out in support to businesses.”
The Treasury said: “Over 10,000 businesses have already been helped by the scheme, with these employers benefiting by an estimated £6m. But more businesses could benefit and HMRC has been working to increase this number.”
The ATT had previously expressed concern that the legislation was overly complex and created unnecessary complications within the practical working of the new allowances
Introduced in 2013 to encourage R&D investment, the scheme allows UK businesses to pay only 10% corporation tax on profits derived from any UK or certain EU patents
Yet, KPMG’s annual survey shows that the UK is still an attractive place to do business, despite falling in rankings in tax competitiveness and FDI appeal
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