In an effort to help boost job creation, the government will no longer require hundreds of thousands of small businesses to pay employment taxes.

Starting in April 2014, nearly 450,000 small businesses throughout the United Kingdom won’t have to pay any jobs tax. On average, small companies pay about £2,000 through the Employment Allowance via their National Insurance Contributions (NIC).

The relief is intended to urge small businesses to hire at least one staffer earning £22,400 per year or about four employees earning the minimum wage.

Chancellor George Osborne describes the cut as the “largest tax cut in the Budget” and it came as a welcome surprise to the Labour Party and business groups, both of which have been calling for a national insurance break for small companies for some time. 

“This initiative will eventually have a double function, that is to either incentivise employers to take on more staff, or to take the saving and boost their profitability. For many small firms who’ve been operating on extremely small margins the latter would be welcome relief,” a spokesman for the Forum of Private Business explains.

Though the NIC, which is charged at 13.8% of most pay, helps fund many state benefits, it is also a significant tax for many employers that could use the capital for other things such as recruiting and new hires.

Employers will have to confirm their entitlement through their regular payroll processes, in order to profit from the new scheme.