22 July 2026
The Work and Pensions Committee has called for significant expansion of Employer National Insurance Contributions (NICs) Upper Secondary Threshold exemption for younger workers as part of efforts to tackle the rising levels of youth unemployment.
In its latest report on Youth employment, education and training, the group of MPs highlighted concerns about the growing number of young people who are not in employment, education or training (NEET) and the challenges many face.
The Committee heard evidence from businesses about rising employment costs, including the impact of the Employer NIC changes announced in the 2024 Autumn Budget. These changes increased the rate from 13.8% to 15% and reduced the secondary earnings threshold from £9,100 to £5,000 per employee per year.
It concluded that slower recruitment has disproportionately affected young people, who are often trying to secure their first job and gain initial workplace experience.
As a result, MPs have recommended that the Government extend the National Insurance Upper Secondary Threshold, allowing employers to have no Class 1 NICs employer contributions on earnings of employees under age 25 until they earn more than £967 per week.
The current rates are:
|
National Insurance category letter |
Employees earning £0 to £96 per week |
Employees earning £96 to £967 per week |
Employees earning over £967 per week |
|
A: all Ees except those in other categories |
0% |
15% |
15% |
|
H: apprentices under 25 |
0% |
0% |
15% |
|
M: Ees under 21 |
0% |
0% |
15% |
If implemented, the recommendation would effectively extend the current 0% Employer NIC treatment available to apprentices under 25 and employees under 21 to all employees under age 25.
The recommendation is not Government policy and there is currently no indication that the changes will be introduced. However, it will be something the CIPP policy team will be keeping a close eye on, whilst these discussions continue, and we will provide further updates once we have them.
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