Employers Class 1 NIC for Apprentices under 25 to be abolished

With effect from 6 April 2016, you may be interested to learn that you may no longer have to pay employer  Class 1 NICs for apprentices under the age of 25.

Currently employer Class 1 NICs are due for all employees aged 21 or over.

 

For the tax year 2016-17 it is proposed that the new NI category H will be used for apprentices who in addition to being under 25 are:

• working towards a Government recognised apprenticeship in the UK which follows a government approved framework/standard

and

• have a written agreement (between employer, apprentice and training provider), giving the government recognised apprentice framework or standard, with a start and expected completion date.

Employers NIC will be at a rate of 0% up to the new Apprentice Upper Secondary Threshold, which will be aligned with the Upper Secondary Threshold for the tax year beginning 6 April 2016.  Earnings above the Apprentice Upper Secondary Threshold (for 2015-16 £3,532 per month) will be at the full rate of 13.8%.

This does not affect the calculation of primary Class 1 NICs deducted from apprentices.

For more information see the HMRC website

Employing Under 21 year olds?

Here is some useful information you need to know

Changes to National Insurance Contributions as of 6 April 2015

Some good news! If you employ anyone under the age of 21 years, Employers Class 1 secondary National Insurance Contributions will change to a rate of 0% up to the equivalent of the new ‘Upper Secondary Threshold’.  At the moment the rate is 13.8% so this is a cost saving that may encourage employers to employ more young people.

We recommend that you check that you have the correct date of birth for your employees stored in your payroll software to ensure that the correct NI rates are used from April 2015.

Useful guide on Employing Staff from the HMRC is available here

Children at work – did you know?

If you are employing a child between the ages of 13 until they are considered as legally having left school, you need to notify the Local Authority, which will be the local County Council or equivalent body.

Each authority publishes guidance on employing young people of school age. As an example to find out what the requirements are for businesses located within East Sussex and when they apply please follow this link to East Sussex County Council guidance.