6 January 2015

Salons that take on apprentices aged under 25 will from April 2016 no longer have to pay national insurance contributions (NICs) on their earnings, the government has said.

The move was announced by chancellor George Osborne in his Autumn Statement in December.

NI Reforms

The chancellor has estimated getting rid of what he called the “jobs tax on young apprentices” will mean employers of around half a million apprentices will be exempt from paying NICs on their earnings from April 2016.

He said: “When a business is giving a young person a chance in life we’re going to support them not tax them.”

The move is in addition to the change coming in from April 2015 whereby employers will no longer have to pay NICs for any employee aged under 21.

Both changes are only for employees below what is called the upper earnings limit, in other words those earning less than £805 a week.

The change in NICs for under-21s from 6 April means it will become even more important salons hold the correct date of birth of all employees, HM Revenue & Customs (HMRC) has emphasised, something also vital for ensuring a salon is paying the correct national minimum wage.

Rates Change

The government will also be extending for another year 100% Small Business Rate Relief (in other words not having to pay any business rates) for firms with properties valued at less than £6,000. Businesses valued up to £12,000 can get relief on a sliding scale.

The relief will now be available until the end of March 2016 rather than coming to an end in March 2015.

A business rate discount for shops valued at £50,000 or lower will also be increased, to £1,500 from £1,000, from April next year, the chancellor said.

Finally, Mr Osborne announced the government is to carry out a review on the “future structure” of business rates, to report in next year’s Budget.

The NHBF has long argued the current system of business rates based on property values puts high street shops at an unfair disadvantage to out-of-town and online retailers.

PAYE Reminder

Separately, HMRC is reminding salons that under the government’s new “Real Time Information” PAYE regime, salons employing fewer than 50 people will face automated penalties for late submission of PAYE returns from 6 March.

This is designed to bring salons into line with bigger businesses, which have been subject to such penalties since October.

However, HMRC has emphasised it will send electronic messages to all employers to let them know when the penalties will apply to them, based on the number of employees shown in the department’s records.

Employment Allowance

More generally, HMRC is reminding salons about its Employment Allowance, introduced last April, under which employers can potentially reduce the NICs they pay for their employees by up to £2,000, more details on which can be found at gov.uk/employment-allowance