Apprenticeships and National Insurance Contributions: What your business needs to know

November 10th 2023 | Posted by phil scott

It’s good news for businesses that employ apprentices 

As of 6 April 2016, companies that employ apprentices will be eligible to receive relief on employer National Insurance Contributions.

Here’s the lowdown on the how, what and why for your business:

How it works

Companies who employ apprentices up to 25 years old will now be exempt from paying secondary class 1 National Insurance Contributions for these employees.

This is valid for apprentices earning up to £827 per week / £43,000 per year.  Previously this was applicable for apprentices up to 21, bringing an additional 4 years of apprentice NIC relief to companies.  Once the apprentice turns 25, the NIC relief will end.  All sectors and employers with apprentices in their team are eligible.

Your business will need to provide evidence of employing an apprentice within this age bracket as part of a UK government approved scheme and you can easily do this through providing one of the following:

• Written agreement of apprenticeship, including a start and projected end date

• Evidence that the apprenticeship is receiving government funding

The benefits to your business

Any relief of tax or National Insurance Contributions can only be a bonus to employers.  Relief on tax or NIC obligations brings immediate, tangible financial rewards and long-term savings.

Once the initial administrative process has been carried out and payroll procedure updated, this is a smooth and simple way for businesses to gain additional commercial benefit from employing apprentices.

Positive aims and encouraging results

Apprenticeships are a win-win opportunity for a business and employee.

Joining an apprenticeship scheme gives young people a different path to skilled employment than the university route.  It’s a great way to learn whilst building a productive career and is a positive alternative to further study followed by entering the job market later.

For a business, dynamic, creative and motivated young people are a valuable asset to the company, contributing towards business development and productivity.

HMRC identify the key aim of the NIC relief as to support employees who offer apprenticeship schemes.  Essentially, the government is demonstrating its commitment to these companies, rewarding them for their contribution to training and their support of young people in society.  The NIC relief is an incentive to both current and new employers of apprentices to continue to support youth employment.

Apprenticeships are here to increase the number of employment opportunities for the younger generation and improve their skills in the workplace.

Get ready to go

If you currently employee apprentices or if you are keen to open up apprenticeships within your business, remember that as of 6 April 2016 your company will be eligible to receive National Insurance Contributions relief for your apprenticeship employees under 25 years old.

Looking to the future

With these extra benefits now in place, it is an exciting time for both business and young people and a truly positive opportunity for the growth of apprenticeship schemes within our economy.