The government's plans to reduce employers' National Insurance Contributions (NIC) will save nearly £5.5 billion per year for businesses by the end of the parliament - the equivalent to £200 per employee.
According to HM Revenue and Customs (HMRC), the savings will be generated through the introduction of the new Employment Allowance, which takes effect from April this year.
Under the scheme, up to £2,000 is wiped off the total NIC bill of every business, helping to encourage hiring among small firms.
Abolishing employer National Insurance for employees under the age of 21 from April 2015 and raising the threshold before a business starts paying NIC for employees will also contribute to significant tax savings for employers.
Chancellor George Osborne said: "Effectively providing cashback on jobs, the Employment Allowance will help [...] businesses achieve their goals and help the UK succeed in the global race. With three months to go until the introduction of the Employment Allowance, I am shining a spotlight on this scheme which demonstrates our support for small businesses and enterprise."
Lowering total NIC contributions will also enable smaller companies to dedicate more resources to securing the professional talent they need through contractors and limited companies.