Last updated: 16 October 2026
The question
I work as a self-employed decorator. If I transfer my business to a new company, will I be able to take advantage of an NIC holiday for new businesses?
Is there an NIC holiday for new businesses?
No. A regional “NIC holiday” for new businesses outside London, the South East and the East of England ran from 2010 to 2013 and has long ended. There is no general National Insurance holiday for new businesses in 2026/27. But several employer NIC reliefs can reduce costs once you take on staff, and some apply from day one.
Employer NIC in 2026/27
Employers pay Class 1 secondary NIC at 15% on employees’ earnings above £5,000 a year. The reliefs below reduce or remove that cost.
| Relief | Who it applies to | Effect |
| Employment Allowance | Most employers with at least one employee other than a sole director | Up to £10,500 off the employer NIC bill each year |
| Under-21 relief | Employees under 21 | 0% employer NIC on earnings up to £50,270 |
| Apprentice relief | Apprentices under 25 | 0% employer NIC on earnings up to £50,270 |
| Veterans relief | Former regular Armed Forces members, for the first 12 months of their first civilian job; available until 5 April 2028 | 0% employer NIC on earnings up to £50,270 |
| Freeport and investment zone relief | New employees working mainly in a special tax site | 0% employer NIC on earnings up to £25,000 |
The Employment Allowance trap for one-person companies
If you incorporate and you are the only director and the only person paid above the £5,000 secondary threshold, the company cannot claim the Employment Allowance. Many single-director companies pay a salary around the £12,570 personal allowance and accept a small employer NIC cost, or pay £5,000 if they cannot claim the allowance.
Sole trader or company for a decorator?
As a sole trader, you pay income tax and Class 4 NIC at 6% on profits between £12,570 and £50,270 and 2% above. In a company, the company pays corporation tax at 19% on profits up to £50,000, and you take a small salary and dividends taxed at 10.75% (basic rate) and 35.75% (higher rate) from April 2026. Dividends carry no NIC. The saving depends on your profit level and whether you need to draw it all.
Example
A decorating company hires an 18-year-old apprentice on £16,000 a year and a 30-year-old employee on £28,000. There is no employer NIC on the apprentice’s pay. Employer NIC on the older employee is 15% of £23,000, which is £3,450. The Employment Allowance wipes this out, so the company pays no employer NIC at all.
Incorporation points
- Assets transferred to the company may trigger capital gains, though incorporation relief can defer them.
- Your existing CIS status does not transfer automatically.
- VAT registration may need updating.
- You will need payroll, Companies House filings and a corporation tax return.
Frequently asked questions
Does the Employment Allowance apply to my own salary?
Only if there is at least one other employee paid above the secondary threshold, or another director.
Can a new company claim the allowance in its first year?
Yes, if eligible, through payroll software.
Are there grants instead?
Some local authorities and growth hubs offer start-up grants, which are usually taxable.
Do the under-21 and apprentice reliefs need a claim?
They are applied through the employee’s NIC category letter in payroll.
Related: veterans NIC relief, Employment Allowance claims and incorporating a profitable business.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with employer National Insurance reliefs. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
