Regional employer NICs holiday: making a retrospective claim
How to make a retrospective claim for NICs holiday scheme which ended on 5 September 2013, including who can apply and time limits.
The National Insurance contributions (NICs) holiday applied to new businesses, in specific locations, that started during the period 22 June 2010 to 5 September 2013. Subject to meeting certain conditions, eligible businesses were able to claim up to £5,000 as a deduction from the employer NICs due for each of the first 10 employees they employed during the holiday period.
Who can apply
Types of business
New businesses that could apply are:
- sole trader, company or partnership that begins to carry on a trade, profession or vocation
- property or investment businesses
- trading charities - whether profit or non profit making
Managed service companies don’t qualify for the holiday. Where an IR35 company met the qualifying criteria, it would:
- have been eligible for holiday on the salary or wage payments they make
- not have been eligible for the holiday on income deemed to be earnings or employment resulting from the IR35 rules
Businesses not considered to be new
Your business wasn’t considered to be new if:
- in the 6 months before the start of the business, you carried on another business and the new business consists, or mostly consists, of the activities of the other business
- you began a business as a result of a transfer of another business and the activities, or most of the activities were carried on in the other business
- before the business started, you agreed to take on part of an existing business at some point during the period of the NICs holiday
- you expanded your business, or set up a new or subsidiary business, alongside an existing one, unless the new business was wholly or mainly different from the existing business
- you were self employed and your business became incorporated, ie became a limited company, unless the activity, or most of the activity is different from the first business
- your businesses were associated businesses and one of the businesses existed before 22 June 2010
You could only apply for the NICs holiday if your principal place of business was located within the following areas of the UK at the time your business started:
- Northern Ireland
- Regions in England
- East Midlands
- North east
- North west
- South west
- West Midlands
- Yorkshire and Humber
You must be able to demonstrate that your principal place of business was within an included region.
If your business didn’t have an obvious principal place of business, eg if it was internet based or it involved driving from one job to the next, the place where you kept your equipment, retained your business records or carried out the administration of your business, will be considered to have been your principal place of business.
If your business had more than one place of business, your principal place of business was where you carried out the greater part of your business, or if your business was split equally and one place qualified and the other didn’t, the location you used for administration, will have been considered your principal place of business.
If your principal place of business was outside the UK in another European Union country, please contact HM Revenue and Customs (HMRC’s) New Employer Helpline.
If you qualified for the holiday and the principal place in which you conducted your business relocated to:
- another of the included countries or regions, your claim could continue
- an excluded region, your eligibility ends at the time that you relocated (on earnings due to be paid on or after relocation)
If you didn’t qualify because your principal place of business was in an excluded region, but you later moved to an included region, you aren’t eligible to claim.
Businesses and state aid
The employer NICs holiday is considered to be a de minimis state aid and those applying to benefit from this scheme are required to comply with certain European Commission regulations.
To come within the state aid de minimis rules, the total aid received by your business must not exceed €200,000 over a continuous period of 3 years.
If your business has:
- had state aid other than de minimis state aid, this must also be included in the limit of €200,000 - if you have exceeded this limit you will not qualify for the NICs holiday
- already had de minimis state aid and the maximum amount of NICs holiday you could benefit from (£50,000) would take you over the state aid limit your business will not qualify for the NICs holiday
If you realise after making a retrospective claim that you had already had state aid and the maximum aid offered to you through the holiday takes you over the limit for your particular business sector, then you must contact HMRC to arrange to pay back any state aid you have had as part of the NICs holiday in its entirety - not just the amount of state aid that took you over the limit.
Your business mustn’t have been in one of the following excluded sectors:
- coal sector
- road freight transport sector - where the aid is to be used to acquire road freight transport vehicles
- those involved in export-related activities
Some businesses are entitled to reduced amounts of state aid so you must consider these lower limits when deciding whether you are eligible to make a late claim:
- road transport - €100,000
- agriculture - €7,500
- fisheries and aquaculture - €30,000
This means new businesses in these sectors may have qualified for de minimis state aid, but weren’t entitled to claim the full £50,000 limit available under the NICs holiday scheme.
If your business falls within the agriculture or fisheries and aquaculture sectors and you have had any form of state aid during the 3 previous financial years you won’t qualify for NICs holiday.
Businesses within the agriculture sector won’t be entitled to claim the NICs holiday if:
- they are businesses active in the primary production of agricultural products as listed in Annex 1 to the Treaty establishing a Constitution for Europe (PDF 364KB)
- they are businesses active in the processing and marketing of agricultural products as listed in Annex 1 to the Treaty, in the following cases:
- when the amount of the aid is fixed on the basis of the price or quantity of products purchased from primary producers or put on the market by the undertakings concerned
- when the aid is conditional on being partly or entirely passed on to primary producers
- aid was contingent upon the use of domestic goods over imported goods
There are financial limits to the amount of state aid any business can receive. To be eligible to receive further state aid - and so potentially be able to apply for the NICs holiday - the amount of state aid already received has to be taken into consideration with these limits in mind.
NICs holiday won’t be allowed where activities which might have been part of another business are carried out in a new business purely in order to qualify.
How to apply
If you are satisfied that your business qualified for the NICs holiday, complete the NICs holiday application form.
The application form must be completed by one of the following:
- the sole owner of the business
- a partner of the business
- the company secretary or director
- the agent/accountant representing the business (where valid form 64-8 is held by HMRC)
HMRC will send you an email acknowledging your application and the relevant NICs holiday end-of-year forms. The email will also let you know the maximum amount of de minimis state aid you can receive under the scheme and the fiscal year(s) the aid relates to.
Almost all eligible businesses can use HMRC’s online form, but if any of the following applies to your business, you’ll need to get a paper application form from the New Employer helpline, as HMRC needs more information before deciding if your business is eligible for the NIC’s holiday. Your:
- principal place of business was outside the UK
- business was in receipt of some form of de minimis state aid
- business was in the agriculture, fisheries/aquaculture, road transport of forestry sectors
HMRC will write to you and tell you the maximum amount of de minimis state aid you can receive under the scheme and the tax year(s) the aid relates to.
If your business is in one of the special sectors mentioned in Businesses and state aid, HMRC will provide you with additional information, to ensure that you can comply with the record keeping requirements under the State Aid Regulations.
You must retain the confirmation letter for 3 financial years. You will need it if you apply for any other form of state aid during that time.
The NICs holiday period for eligible businesses was as follows. For businesses that started:
- between 22 June 2010 and 6 September 2012 - the first 12 months after the date the business started
- after 6 September 2012 - from the date the business started, up to and including 5 September 2013
For the purpose of the NICs holiday, the date your business started will be treated as the earlier of the date:
- your business started to trade
- you hired your first employee
If exceptionally, your business started to trade on or after 22 June 2010, but you hired your first employee before that date, your business will be treated as having started on 22 June 2010.
During this time, your first 10 employees were potentially ‘qualifying employees’ and the holiday period for each qualifying employee was a maximum of 12 months from the date they were employed by you to 5 September 2013, when the scheme ended.
The maximum amount of employer NICs you can claim for each qualifying employee is £5,000, even if you paid more employer NICs than this for an employee during that employee’s holiday period.
As the scheme didn’t actually start until 6 September 2010, you can only claim for the employer NICs due on earnings that were:
- paid on or after 6 September 2010
- due to be paid on or before 5 September 2013
If you met the qualifying criteria, your first 10 employees will have included:
- any employee hired before 22 June 2010
- any employee taken on from 22 June 2010, no matter how much you paid them, even if they left your employment before the scheme started on 6 September 2010
- employees with more than one job with your business (they count as one employee from the limit of 10)
- family members if they were employed by your business
- directors (voted amounts qualify provided they were voted in the first year of employment)
- part-time and casual staff
- employees over pension age
If you employed more than 10 employees at the same time, you can chose which employees to count as the first 10.
If a qualifying employee left and was subsequently re-employed by you, the holiday period for that employee is calculated based on when the employee first started to work for your business. The employee counts only once towards your limit of 10.
Time limits for making a claim
A retrospective claim for the NICs Holiday can’t be made after the end of the period of 4 years, beginning with the day on which the last deduction could be made in respect of the qualifying employee.
As the scheme ended on 5 September 2013 the latest possible date that a claim can be made (provided a deduction was due for a qualifying employee on that date) would be 4 September 2017.
The time limit could be earlier depending on both when the business and qualifying employee started.
|Date your business started||Date an employee started||Last date for making the deduction||Last date for making a claim|
|6 Feb 2011||6 Feb 2011||5 Feb 2012||4 Feb 2016|
|6 Feb 2012||30 Apr 2012||29 Apr 2013||28 Apr 2017|
|6 Feb 2013||4 Mar 2013||5 Sept 2013||4 Sept 2017|
Calculating your claim
Using your payroll records, calculate the amount of employer NICs you have paid and are entitled to claim for each qualifying employee.
The scheme ended on 5 September 2013 and you can’t claim the NICs holiday for any wages or salary that were due to be paid after that date.
|Employee is paid||Payment is due to be made||Answer|
|Weekly, one week in arrears||On 6 Sept 2013 for work done week ended 30 Aug 2013||NICs holiday can’t be claimed as payment was due to be made after 5 Sept 2013|
|Weekly on a Saturday||3 weeks wages on 31 Aug 2013 for that week and following 2 weeks as employer is going on holiday||NICS holiday is only due on the payments due to be paid before 5 Sept 2013 - the payment due on 31 Aug 2013, not those due on 7 Sept or 14 Sept|
|On Wednesday following receipt of time sheets due on previous Friday||4 Sept 2013, but the timesheets were late and employees had 2 weeks pay at the same time on 11 Sept 2013||NICs holiday can be claimed for the week’s pay of 4 Sept 2013, as it was due to be paid before 5 Sept 2013|
|On the last working day of each month||30 Sept 2013||NICs holiday can’t be claimed as you can’t split the payment and calculate NICs due for part of the month, as the pay was all due to be paid after 5 Sept 2013|
If your employee was a member of a contracted-out occupational pension scheme, you can claim the amount that was due at the relevant contracted out rate, using the tables detailed below.
|Contracted out NICs category||Equivalent not-contracted
out NICs category
|D (NICs table CA89)
F (NICs table CA43)
|E (NICs table CA39)
G (NICs table CA43)
|L (NICs table CA39)
S (NICs table CA 43)
Directors and annual earnings review of NICs
A director of their own limited company who qualifies for the NICs holiday as a new business from 1 April 2013 has opted to pay NICs as an employee, rather than by the director’s method. The director has been paying himself £1,000 a month, every month since the end of April 2013. The easement of the rules for directors’ NICs is to allow directors to pay their NICs at regular intervals like other employees, but on the last payment in the tax year, they need to reassess the employee and employers NICs using the annual or pro-rata annual earnings period.
If appointed as a director at Companies House from the beginning of the tax year, the employer’s NICs are only due when their cumulative earnings exceed the annual Secondary Threshold (ST) of £7,696. If they have been paid £1,000 per month since April 2013 and their last payment before the scheme ends on 5 September 2013 will be at the end of August, the cumulative pay is £5,000 during the holiday period which is below the annual ST.
When earnings do go above the annual ST, the employer’s NICs holiday scheme will have ended. They will need to amend their records and calculate and pay over all of the employer NICs above the ST in accordance with the annual reconciliation requirement for directors.
For further advice, contact the Employer Helpline.
Completing your NICs holiday end-of-year return
To support your claim, you must submit a completed end-of-year return - forms E92 and E89 - for each tax year that you are claiming for. These will be sent to you after we have acknowledgemed your claim.
You don’t have to complete weekly or monthly amounts of employer NICs paid on form E89, the yearly total is sufficient. You may however find it useful to complete the weekly and monthly amounts if your employee was a member of your contracted-out occupational pension scheme.
You will be sent one paper form for each tax year that you are claiming. You must complete all the boxes on the form - incomplete forms will be rejected.
You can print form E89 or photocopy the blank form if you are claiming for more than one employee.
Both sides of this form must be actioned:
- side 1 is information about your business and the amount of NICs holiday you are claiming for the tax year
- side 2 provides information about what to do after you have completed the form
Attach form(s) E89 to form E92 and post them to:
HM Revenue and Customs
PAYE Employer Office
BP1302 Benton Park View
Reviewing your payment record
On receipt of your NICs holiday end-of-year return, HMRC will review your payment position for the relevant tax year, as your retrospective claim may mean that you have overpaid.
If you have overpaid employer NICs and you reported your payroll in real time for the years that you are making your claim and have:
- not already submitted an Employer Payment Summary (EPS), you must submit one now showing the amount of NICs holiday for each year of your claim
- previously submitted an EPS, you must submit a further EPS showing the amount of NICs holiday for each year of your claim
You can check your payment position using PAYE Online.
You must retain:
- the acknowledgment letter from HMRC which tells you how much de minimis state aid you have been granted
- separate records for each qualifying employee which include:
- employee name and National Insurance number
- dates employee started their employment and their holiday period ended (this may be less than one year if the £5,000 limit is reached or when the scheme ended on 5 September 2013 whichever is sooner)
- amount of holiday for each tax year
- running total across all tax years, to ensure that the £5,000 limit is not exceeded
Records must be kept for no less than 3 years from the date on which the final holiday deduction could be made in respect of each qualifying employee. HMRC may inspect your records at any time to check that the scheme has been operated correctly.
Decisions and appeals
If HMRC decides that a business isn’t entitled to claim, the business can request a review of that decision and ultimately, formally appeal against the decision.
Any appeal will be against whether an employer is:
- or was entitled to make a deduction from their NICs payment and if so, how much they are entitled to deduct
- entitled to a refund and if so, the amount of the refund