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Employer’s National Insurance Savings

In addition to the many benefits employers gain from employing apprentices, there are also National Insurance savings that you can benefit from.

Apprentices aged under 25

If you have any apprentices in your business, under the age of 25, you may not have to pay employer’s national insurance contributions on their salary. The employee themselves is unaffected and will continue to make employee contributions at the usual rates. Read the Government guidance on Paying employer National Insurance contributions for apprentices under 25.

Taking advantage of this incentive is simple – use the NIC code ‘H’ (rather than ‘A’) for relevant employees when processing your payroll. The individual(s) responsible for dealing with your payroll and tax should be able to deal with this easily.

 

Employees Under 21

You may not be aware that you don’t have to pay National Insurance contributions for all employees under the age of 21 – regardless of whether they are an apprentice or not. Read the Government guidance on the abolition of employers National Insurance contributions for the under 21s to find out more.

Upskilling a young person in your workforce with an apprenticeship or recruiting a young apprentice with us is a great way to improve your company’s productivity; motivating and developing your staff, whilst also retaining young talent.

Taking advantage of this incentive is also straightforward – use the NIC code ‘M’ for relevant employees when processing your payroll.

 

Savings

Depending on how much the employee earns, the savings can be significant – over £1,000 per year for someone earning £16,000.

Employee SalaryMonthly SavingsAnnual Saving
£8,164£0.000
£10,000£21.11£253.37
£11,000£32.61£391.37
£12,500£49.86£598.37
£15,000£78.61£943.37
£16,000£90.11£1,081.37
£17,500£107.36£1,288.37
£20,000£136.11£1,633.37

* based on rates for tax year 2017/18

 

Other Incentives

As an employer, in addition to the money you can save on National Insurance, if the apprentice is under 19, you could receive up-to £1,000 in incentives. There are also other circumstances where you will receive incentives for under 25’s. See the Interserve Learning & Employment non-levy payers payment fact sheet for details.

If you have had less than 50 employees over the last 12 months (and have less than 50 currently) and the employee is under 19, the apprenticeship is likely to be fully-funded by the Government as well. You could benefit from a fully funded apprenticeship, a £1,000 incentive and National Insurance savings simply by signing up today.

If you do have to make a 10% contribution (typically £150 to £900), the NI savings and 16-18 incentives on offer for employing a young person are highly likely to outweigh this cost.

 

Important Information

  • NI savings based on Government published rates for 2017/18 tax year and may change in future years.
  • If in doubt, you should always take independent tax advice.
  • When employees are no longer under 21 or under 25, you must amend the NI code accordingly and that is your responsibility as the employer.

 

Apprenticeships for your business

You can find out more about hiring apprentices for your business on our apprenticeships information for employers web page.

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