Policy adviser at HM Revenue & Customs (HMRC), Raj Nayyar, has confirmed that the government’s proposal to give limited companies and other businesses a £2,000 employment allowance towards their national insurance contributions (NICs) will become law by the end of the year.

According to Mr Nayyar, the proposed measure will be legalised despite the fact that it was not developed sufficiently to feature in the draft National Insurance Contributions Bill, which was published on 15 July. He explained: “We did not publish draft legislation for the employment allowance as we were not far enough along the policy development route, but it will be in the final bill.”

Mr Nayyar said that all businesses would be entitled to the allowance from April 2014 onwards, but that more details will be confirmed during the upcoming months as further decisions are made concerning the finer points of the new law. He also noted that it was “difficult to comment” on any amendments that would be made as the legislation is still being considered by ministers.

The draft bill is considered part of the current government campaign to vigorously crack down on “abusive” tax schemes used by firms that are looking to avoid paying their fair share of business tax. It is hoped that if companies are presented with an allowance to minimise employment costs, instances of tax avoidance will eventually decrease.

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