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HMRC internal manual

National Insurance Manual

Class 1 structural overview: abolition of secondary NICs for apprentices under the age of 25: assessment

The examples below use the rates that apply for the 2016 to 2017 tax year.

Example 1

A monthly paid apprentice is aged 23 at the time earnings of £1,600 are paid. The earnings fall below the Apprentice Upper Secondary Threshold (AUST).

Primary £1,600 - £672 = £928 x 12% = £111.36
     
Secondary £1,600 - £676 = £924 x 0% = £0
Total NICs due   = £111.36

Category H should be used

Example 2

A 17 year old apprentice is monthly paid at the time earnings of £4,000 are paid. The earnings are above the monthly AUST.

Primary £4,000 - £3,583 = £417 x 2%

plus

£3,583 - £672 = £2,911 x 12% = £8.34

 

=£349.32    
     
  Secondary £4,000 - £3,583 = £ 417 x 13.8%

plus

£3,583 - £676 = £2,907 x 0% =£57.55

 

= £0      
  Total NICs due   = £415.21

Category H should be used.

Example 3

A monthly paid apprentice turns 25 on 15 June 2016. They are paid £1,400 on 30 June 2016.

Primary      £1,400 – 672 = £728 x 12%      = £87.36
     

Secondary NICs

As payment is made on 30 June and the apprentice is now 25 years old the zero rate of secondary NICs up to the Apprentice UST is no longer available. All NICs should be assessed at category A.

Secondary £1400 – 676 x 13.8%                     = £99.91
     
Total NICs due   = £187.27