Summary
11.This is a relatively short Act containing two measures. Part 1 covers the increase in rates and Part 2 covers the Holiday. Part 3 contains general provisions concerning the measures in Parts 1 and 2.
12.The Holiday is aimed at encouraging the creation of private sector jobs in regions most reliant on public sector employment, through reducing the cost to new businesses of employing staff. During a three year qualifying period, new businesses which start up in these areas will get a substantial reduction in their employer NICs. Within the qualifying period, these employers will not have to pay the first £5,000 of Class 1 employer NICs due in the first twelve months of employment.
13.This will apply for each of the first 10 employees hired in the first year of business and will operate in selected parts of the UK. The scheme started on 6 September 2010. Any new businesses set up on or after 22 June 2010 which meet the eligibility criteria set out in the draft legislation published on 27 August 2010 will be able to benefit from the Holiday.
14.The measure will not apply in three English regions. These are Greater London, the South East Region and the Eastern Region.
15.In order that the Holiday could begin to operate on 6 September (before the passing of any legislation giving effect to it), the Commissioners for HMRC have exercised their “collection and management” powers under sections 5 and 9 of the Commissioners for Revenue and Customs Act 2005 so as not to require qualifying employers to pay employer NICs in respect of their qualifying employees from the implementation date. The Commissioners have satisfied themselves that this is an arrangement which will cost less (thus increasing net yield) than collecting employer NICs until Royal Assent of the Act and then refunding them.
16.This is on the basis that:
	Ministers made a statement of what the scheme entailed, specified which people could expect to benefit from the scheme, and stated the intention to legislate with retrospective effect back to the implementation date; and
	HMRC published draft provisions to accompany the statement.
17.The Budget notes included a statement that made it clear to those taking up the Holiday in advance of Royal Assent that it was subject to the successful passage of the legislation and that, if the Act was not passed or the legislation relating to the Holiday was substantially altered, they would have to pay to HMRC any employer NICs withheld by 19 April 2011.