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National Insurance allowance to boost SME job creation

One in five small businesses is feeling optimistic about growth and expansion following the Government's announcement to introduce a £2,000 allowance towards employer National Insurance contributions (NICs).

The research from Direct Line for Businesses found that a third of businesses also plan to recruit additional staff to take advantage of the reduced cost of employment via the Employment Allowance scheme.

The new allowance will come into effect from April 2014 and is estimated to take 450,000 of the UK's smallest businesses out of paying employer NICs.

Jazz Gakhal, head of Direct Line for Business said it was encouraging to see so many businesses keen to expand: "The Government's decision to reduce the financial burden for small companies is a welcome boost for owners and managers across the country. Given SMEs account for over 99 per cent of all private sector businesses in the UK, the health of this sector is vitally important."

Announcement the Employment Allowance in Budget 2013, Chancellor George Osborne said: "For the person who's set up their own business, and is thinking about taking on their first employee, a huge barrier will be removed. They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax."

Helen Dickinson, director general of the British Retail Consortium (BRC), welcomed the change, saying: "We called for a time-limited national insurance holiday, as an easy way to encourage businesses to take on young unemployed people. Existing incentives are cumbersome and not being taken up."

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