From 6 April 2016, employers may not need to pay Class 1 National Insurance contributions for an apprentice, if the apprentice:
- is under 25 years old
- is on an approved UK government apprenticeship standard or framework (these can differ depending on UK country)
- earns less than £967 a week (£50,270 a year)
If the apprentice meets the conditions above, then the employer is exempt from National Insurance employer on the apprenticeship gross salary.
Employees will continue to pay the standard rate of Class 1 National Insurance contributions through their salary. They will not see any reduction in their payments, only the employer will benefit from this change.
How to process on your payroll software
You will need to update the employees NI category letter –
Letter H – Apprentice standard rate contributions, if your apprentice is under 25 and in an approved apprenticeship standard or framework
Letter G – If your apprentice is a foreign-going mariner and is under 25
When the statutory apprenticeship stops, or your apprentice turns 25 you’ll need to update their NI category letter appropriately.
Evidence needed
If your apprentice meets the conditions listed, you’ll need evidence to apply for national insurance relief.
Evidence can be either:
- a written agreement between you, the apprentice and a training provider
- evidence that government funding is received for the apprenticeship (England and Wales only)
The written agreement must show:
- the apprenticeship standard or framework
- a start and (expected) end date for the apprenticeship
If the training provider has not signed the written agreement, they’ll need to give you a document stating:
- that they’re an approved (recognised) training provider
- what training the apprentice is undertaking
- what training has already been completed by the apprentice
Alternatively, in England and Wales, you can provide evidence of government funding for the apprenticeship.
Evidence of funding can be either:
- a declaration that you will receive apprenticeship incentive payment
- the employer payment schedule to the provider
