He said: “Small businesses are the lifeblood of our economy and we want to do what we can to support them.
“The Employment Allowance will reduce the cost of taking on new staff, supporting 108,000 businesses in the catering, accommodation and food industries, and hundreds of thousands more across the UK with an ambition to grow, by reducing the cost of hiring their first employee or growing their workforce.”
The businesses will be able to benefit from up to £2,000 off their employer NICs bill – the tax that an employer pays for employees’ entitlement to a State Pension – from April 2014 thanks to the Government’s new Employment Allowance.
Available to all 1.25 million businesses and charities in the UK, over 90% of the benefit of this allowance will go to businesses with fewer than 50 employees.
Some 46,000 businesses in catering, accommodation and food paying NICs of £2,000 or less will see their employer NICs wiped out.
A business that employs one person on £22,400 will pay no employer NICs. A business employing five adults full-time on the national minimum wage will see their employer NICs bill reduced by over 80 per cent.
Available every year, the allowance will be simple to claim and easy to administer. Businesses will just have to confirm their eligibility for the allowance through their regular payroll processes and up to £2,000 will be deducted from their employer NICs liability over the course of the year.