News story

Carmichael hails £100m boost for Scottish businesses

UK Government employment allowance will help Scottish businesses grow, expand and create jobs.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
employment allowance inforgraphic

Small businesses are set to be the biggest beneficiaries of the UK Government’s employment allowance - a reduction in an employer’s National Insurance Contributions.

Introduced on Sunday, the allowance represents a £2,000 cut in an employer’s National Insurance Contributions (NICs) bill and will provide a boost of £100m to 70,000 businesses across Scotland with 35,000 being taken out of paying employer NICs altogether.

With over 90% of the benefit of this allowance going to small businesses, Scottish Secretary Alistair Carmichael visited award winning high tech start up business Holoxica today to discuss how the employment allowance will benefit them.

Founded in 2008, Edinburgh-based Holoxica specialises in holographic 3D visualization including digital hologram products which are sold to the medical, scientific and engineering markets.

On his visit the Scottish Secretary toured Holoxica’ s office and saw some their recent pioneering work in holographic displays and heard how they have benefited from Government support already including from the Technology Strategy Board.

Mr Carmichael said:

It was great to visit a pioneering and expanding business today and hear about their exciting plans for the future.

The employment allowance shows that we are on the side of small businesses, the lifeblood of the Scottish economy. They are the driving force of our economic recovery and the innovators, pioneers and major employers of the future. From Sunday this £100m boost will allow them to invest, expand and create new jobs.

Holoxica founder Javid Khan said:

The UK’s Government’s employment allowance is a significant boost for small businesses like ourselves. Given the economy’s burgeoning recovery, steps like these are vital to ensure the continued health of SMEs in the UK.

This measure, in addition to the tax credit increase for small companies’ research and development - a measure that we directly benefit from as an SME with R&D capabilities - offers an encouraging signal that the government has the best interests of small businesses at heart.

Tax changes coming into effect this week will see the biggest cuts to business taxes for two decades and the most important in a generation. These include:

  • cutting corporation tax from 23% to 21%. It has fallen from 28% in 2010 and will fall further to 20% in April 2015.
  • doubling the Annual Investment Allowance – tax relief for investment in plant and machinery – to £500,000, and extending by a further year to December 2015, meaning 99.8% of businesses will pay no tax on capital investment
  • freezing fuel duty so that it will be 20p per litre less than under inherited plan.
  • the employment allowance comes into effect, representing an up to £2,000 cut in employer NIC’s. Across the UK this will benefit over one and a quarter million employers, over 90% of them small businesses. 400,000 small businesses in the UK will no longer pay employer National Insurance at all.
Published 3 April 2014