The National Insurance Contributions Act 2011 received Royal Assent on 22 March 2011.

The Act contains two measures:

1. Increases in the rates of National Insurance contributions (NIC) from 6 April 2011 as follows:

• an increase in the main rates of Class 1 NIC (paid by employees) and Class 4 NIC (paid by the self-employed) by 1% to 12% and 9% respectively;
• an increase in the Class 1 employer rate of NIC by 1% to 13.8% which will also apply to Class 1A and Class 1B NIC; and
• an increase in the additional rates of Class 1 (paid by employees) and Class 4 NIC (paid by the self-employed) by 1% to 2%.
• This Act therefore provides for the rate rises, while the threshold rises announced last June are implemented via other legislation.

2. The regional employer NIC holiday for new businesse.

This measure is aimed at encouraging the creation of private sector jobs through reducing the national insurance cost to new businesses of employing staff.

It is intended that during a three year qualifying period, new businesses which start up outside of three excluded areas will qualify for a reduction in their employer NIC.

Within the qualifying period, these employers will be exempt from the first £5,000 of Class 1 employer NIC falling due in the first twelve months of employment for each of the first ten employees hired in their first year of business.

The scheme started on 6 September 2010 with any new businesses set up from 22 June 2010 which meet the eligibility criteria also able to benefit from the scheme. Northern Ireland is included in the scheme.