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This publication is available at https://www.gov.uk/government/publications/national-insurance-contributions-for-under-25s-employer-guide/paying-employer-national-insurance-contributions-for-apprentices-under-25
From 6 April 2016, if you employ an apprentice you may not need to pay employer Class 1 National Insurance contributions (NICs) on their earnings below £827 a week (£43,000 a year).
They must be under 25 years old and following an approved UK government statutory apprenticeship framework (frameworks can differ depending on the UK country).
You can check that your apprentice is in a statutory apprenticeship using the following links:
If your apprentice meets the conditions above, you’ll need to have evidence to be able to apply the relief. This can be either:
- written agreement between you, the apprentice and a training provider
- in England and Wales, evidence that the apprenticeship receives government funding
Written agreement must show:
- the government apprentice framework or standard
- a start and (expected) end date for their apprenticeship scheme
If the training provider hasn’t signed the written agreement, they’ll need to give you a document that shows:
- they’re an approved (recognised) training provider
- the training your apprentice is undertaking, and any training already done
Alternatively, in England and Wales, you can provide evidence of government funding of the apprenticeship. This could be the declaration to receive apprenticeship incentive payments, or the employer payment schedule to the provider.
You could be the employer and a trainer if you’ve been approved by the Skills Funding Agency in England, or hold a contract for the delivery of Apprenticeships in Wales.
NICs category letters to use
|Category letter||Apprentice conditions|
|H||Apprentice standard rate contributions - if your apprentice is under 25 and in an approved apprenticeship framework|
|G||If your apprentice is a foreign-going mariner and is under 25|
If your employee is under 21 and meets the same conditions as an apprentice under 25, use the H or G categories.
There’s separate guidance and categories for employees who aren’t apprentices, under the age of 21.
When the statutory apprenticeship stops or your apprentice turns 25 you’ll need to use a new category letter.
The apprentice rate only applies to payments which are liable for Class 1 secondary NICs.
What you can tell your employees
Employees will continue to pay the standard rate of Class 1 NICs through their salary. They won’t see any reduction in their payments. It’s employers who’ll benefit from this change.
The employee’s entitlement to contributory social security benefits, including the State Pension won’t be affected and neither will their entitlement to statutory payments. Existing employees may notice a change to the National Insurance category letter on their payslip.