Small businesses are to be given a new allowance which will mean no employer tax payments are liable for staff hired on less than £22,000 a year.
The new Employment Allowance will apply to around one third of all employers in the country who will now be able to hire four people at minimum wage or one person at £22,000 a year.
Speaking in his budget announcement, George Osborne MP said the government supports people who work hard and want to get on.
He said: “There is one final tax change I want to tell the house about. Aspiration is about living in a country where people can get jobs and fulfil their dreams. I want to support jobs and the small businesses that support them. The cost of employing people is a barrier to taking an extra person on so I am creating the employment allowance.
“I am taking the first £2,000 off the employer national insurance bill off of every company. It will mean that 450,000 small businesses – one third of all employers in the country will pay no jobs tax at all.
“For the person who set up their own business who is thinking about taking on their first employee, they can hire four people on the minimum wage and pay no jobs tax. It comes available in April next year and it will also be available to charities and community sports clubs.”