There are precious few incentives on offer at the moment to help guide your business through these challenging times.
The recent budgets have included little to make the idea of starting a new business any more attractive. For this reason I’m very keen to make practitioners aware of any crumbs that have been thrown out to us. The Government is committed to a new business initiative until 5 September 2013.Under the scheme an employer is allowed deductions from employers National Insurance contributions, obviously conditions apply. Deductions are limited to £5,000 per employee, within the first year of trading. The main initiative proviso is geographical, with the aim to promote new business in ‘the provinces’ the practice must be outside of the following areas; London, the South East and East of England.
An absolute prerequisite to qualify is that the practice must be an entirely new venture, for the dental industry this of course means a squat practice – so the purchase or rental of premises that then needs to be converted into a surgery. Unfortunately you will not qualify if you have bought an existing practice or you are expanding the business to a second location.
Once you have satisfied all criteria the savings can be made, and with the employers NI currently set at 13.8% of staff wages your savings could be very substantial. Using an average practice as an example, with four staff members the total employers NI figure will typically be in the region of £5,000 per annum, all of which will therefore be deductible. For an illustration of the savings available refer to figure one at the bottom of the page.
The allowance will cover the first ten employees that are hired and will run for the first year of trading. So provided staff turnover is not excessive then the practice could stand to save up to a maximum of £50,000 in its first year of trading. In reality the savings for dental practices would be less, as it is unlikely that a practice just starting out would have staff costs this high.
The initiative started 6 September 2010 so if your practice commenced trading after this date you will probably qualify, this would be for one full year from the date your doors first open for business.
If you do qualify but have not claimed your payment holiday, it is not too late. A request can be made to backdate your application and reclaim any NI already paid over to HMRC. This may mean re-submitting your year- end return however.
Figure 1. Illustration of staff costs and the 13.8% Employers National Insurance burden
Staff Costs if NI Holiday taken up – £65,000
Staff Costs if NI Holiday not taken up – £70,066
Potential benefit of NI holiday – £5,066
