New Business Social Security Incentives

New business start-ups

Social Security rules are changing in January for anyone setting up a new business. Owners of new businesses will be eligible to pay a lower contribution rate for the first 2 full calendar years of trading.

This is because the assessment of earnings in the early years of a new enterprise will no longer be based on the business owner’s previous earnings as an employee, as these could be considerably higher than earnings during the first few years of trading.

From January the newly self-employed will instead pay one third of the rate set for the Standard Earnings Limit.  This means in 2012 they would pay £157.42 per month (one third of the SEL monthly rate of £472.25).  Once tax assessments are available for the first year of trading, contribution levels will be re-calculated.

This change removes what has often been described as a disincentive for entrepreneurs considering their first step into self-employment.

© Copyright Bracken Rothwell site powered by Switch Digital