Budget 2010: Lower salaries avoid 'jobs tax'

The budget 2010 confirmed that the business employees, who earn less than £21,000 a year will be saved from a 1 percentage point surge in the Budget in National Insurance contributions by coming April.

However, the businesses having staff earning over £21,000 will pay more to employ them under this Budget plan.

Accountant Kingston Smith said that an employee earning £40,000 per year has to pay an additional tax of about £190.

Also the employers and employees will not get rid of from this so called 'jobs tax'.

The increase of 1% for employers and employees will go ahead from April next year.

New companies started from today will also receive a one-year national insurance tax break worth up to £50,000 per company, and the demands of small businesses for full change in policy of NIC (National Insurance contributions) increases to fully offset the ‘tax on jobs’.

A tax partner at Ernst & Young said that current mechanism for the exemption will be far simpler than its predecessor scheme, which was criticized for being overly burdensome.

It is said that the benefit of budget goes only to the business groups carrying out "new economic activity."

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