Abolition of employer NICS for apprentices under the age of 25

20 May 2015

Briefing for Software Developers


The National Insurance Contributions Act 2015 provides that from 6 April 2016 employers of certain apprentices under the age of 25 will no longer be required to pay secondary Class 1 National Insurance contributions (NICs) on earnings up to a new Apprentice Upper Secondary Threshold (AUST).

The AUST for the tax year 2016/17 will be equal to the Upper Earnings Limit for tax year 2016/17.

The relief will introduce a zero rate of secondary Class 1 NICs on earnings up to the AUST, for qualifying apprentices from 6 April 2016 and will apply to both new and existing apprentices.

The calculation of primary Class 1 NICs is unaffected.

This is a permanent change to the structure of NICs. In similar fashion to the zero-rate of NICs for employees under the age 21, there will be no change to the Class 1 NICs assessment rules already in place.

The full rate of secondary Class 1 NICs will continue to be due on earnings above the AUST.

Data suggests that there are around 180,000 employers offering apprenticeships in the UK.

Work is underway to define what constitutes a qualifying apprentice to enable employers to apply the correct rate of NICs. The definition of a qualifying apprentice for the purposes of the Apprentice’s zero rate will be provided in regulations and will be available later in the year.


The relief will be delivered by introducing two new National Insurance (NI) category letters

  • New Category ‘H’ - standard rate contributions for Apprentices under age 25, and
  • New Category ‘G’ – standard rate contributions for Apprentice Mariner under age 25.

The emerging solution however will give the ability from one year to the next to:-

  • Change the age range for qualifying apprentices, and
  • Vary the level of earnings at which the AUST is set.

For 2016/17, employees considered as eligible apprentices aged sixteen up to twenty five will have zero rate of Class 1 secondary NICs on earnings below the AUST.


Customer validation is being built into HMRC’s software to notify employers when they may have used an incorrect category letter based on a new employee’s age.

As for the Under 21 measure, we would like to encourage software developers to include validation checks between the new NI category letters and the date of birth recorded on the payroll system.