The best thing the Tories have done for me

Everyone loves to hate the Tories. At least that’s how’s it been within my lifetime. Since coming to power in May 2010 most of us have been following what seems to be a constant juggling match with our most prized possessions: education, health, financial services (and, for a moment there, even our forests…). But I can’t say I disagree with everything they’ve done.

I’m a strong believer the UK needs a better “starting-up” scene. Notice I don’t use the term “startup”, which, in my opinion, has been taken over by the tech industry to mean fast-moving, insanely funded business ideas that appear to fizzle out as quickly as they begin. The UK needs people starting up companies not just in tech, but also in one of the many other industries out there. When I talk about a better starting-up scene, I mean a more approachable environment in which people are encouraged to start up their own companies. To realise their own ideas.

One of the best things the tories have done came just one month after taking office during the June 2010 Emergency Budget.  George Osborne took the stage to announce several corporation and PAYE tax reforms, skip to 9minutes 50 seconds to hear it:

The National Insurance Holiday scheme exempts all new companies outside of London from paying employer’s national insurance contributions for up to £5000 per employee (max. 10 employees). This isn’t something to be sneered at. Unless you are paying yourself and your employees over £43k a year, in which case you can probably afford the NIC contributions, this is going to save your company £5000 a year per employee. Even if you pay over £43k, you can claim the £5000 in contributions.

Let’s take the average annual salary for a person in Rhondda Cynon Taf, a county in desperate need of innovation and new businesses (source).

Average Annual Salary (Gross): ~ £25555

Monthly Salary (Gross): ~ £2130

Employee Income Tax: ~ £300

Employee NIC: ~ £185

Monthly Salary (Net): ~ £1650

Employer NIC: ~ £215

For a new Ltd company with two employees earning an average wage, that’s a saving of £430 a month in tax, £5160 a year (£5000 recoverable). Pretty helpful. This money can be spent on other costs a company has or even as savings to make a more stable business. It even makes taking on new part-time and full-time employees more attractive.

I’m not paying myself anywhere near £43000, but the National Insurance Holiday scheme has meant that I can pay myself around £150 more a month because my company has it in the pot. All I can say is Thank You, George.

One more thing…

I should add that there is one more thing I would like to see more than anything else in the UK. It was also touched upon during the budget but hasn’t yet successfully made it nationwide: The New Enterprise Allowance Scheme.

Germany has a similar scheme where unemployed individuals who are eligible for benefits (have to have worked and paid taxes for two years in a row), get Jobseekers Allowance (“dole”) for the first year of starting up their own company. I want this in the UK. It needs to be easy to access, guaranteed and available to all. It needs to be advertised too, not just some little backdoor thing politicians can use to claim they are “trying hard”.

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