Abolition of employer national insurance contributions for apprentices under the age of 21 and 25 respectively (Reduction of secondary Class 1 NICs for apprentices)

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National Insurance Contributions Act 2014 (with regard to apprentices under the age of 21) and National Insurance Contributions Act 2015 (with regard to apprentices under the age of 25)

To make it cheaper for employers to take on apprentices (HM Treasury, 2014)

HM Revenue & Customs (HMRC) is responsible for the overall management, monitoring/evaluation of the instrument and day-to-day operation.

Companies employing apprentices aged 16-25.

The instrument supports only apprenticeship.

State (loss of tax revenue)

According to the legal specification, the employer saves 13.8% of national insurance contributions (NIC) which would be due on the gross pay between the secondary threshold ( EUR 9,247 per year) and the apprentice upper secondary threshold (EUR 49,020 per year) (all figures valid for the tax year 2016/17). In practice: given that there is a threshold below which no employer NIC is paid the total savings amount to EUR 616 for an annual salary of EUR 13,680 and EUR 1,628.2 for an annual salary of EUR 21,090 .

Employer's national insurance contributions for apprentices

In tax year 2016/17 (running from 6 April 2016 to 5 April 2017), the annual cost to this instrument from public sources (i.e. the loss of public tax revenue) was EUR 120,000,000.

No data on the number of companies that took the advantage of the tax relief is available.
In 2016, approx. 180,000 employers offered apprenticeships in the UK, across all apprenticeship levels. Employers whose apprentices are all 25 and older are not able to benefit from the tax relief.

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National insurance relief was initially introduced in 2015 for employers employing apprentices under the age of 21 and was then extended to those employing apprentices under the age of 25 in 2016.

HM Revenue & Customs (HMRC),
https://www.gov.uk/government/organisations/hm-revenue-customs

HM Treasury (2016), AUTUMN STATEMENT 2016, Forecast