NIC relief for employers employing apprentices under the age of 25 was introduced on 6 April 2016. Employers pay zero percent on earnings between the Secondary Threshold for national insurance up to the Apprentice Upper Secondary Threshold (AUST) which is currently aligned with the Upper Earnings Limit. Where the apprentice earns more than the AUST, then the employer pays 13.8% on the excess.
Although the AUST has been aligned with the Upper Earnings Limit for national insurance since 2016, the legislation can be amended to remove the alignment and also to change the qualifying age of the apprentice.
The employee’s (Primary) national insurance contribution is unaffected. The employee pays twelve percent on earnings between the Primary threshold and the AUST and potentially two percent on earnings above the AUST although to qualify initially, the apprentice’s earnings must be below the AUST. The Primary national insurance contributions for an apprentice, mirrors the percentages used for category A.
To qualify as an apprentice, the employee must be below the age of 25, and on an approved UK government apprenticeship standard or framework, depending on the UK country. They must also earn less than the Upper Earnings Limit of £967 per week.
The apprenticeship frameworks for England moved to apprenticeship standards in 2020, so any existing apprentices on frameworks must have started on or before 31 July 2020 to qualify.
Further details can be found on Gov.uk