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Feb 2014


Incentive for UK employers to employ individuals under the age of 21

Abolition of Employers National Insurance Contributions for Under-21s

From 6th April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on earnings up to the upper earning limit (UEL), for employees under the age of 21. The upper earning limit in 2015-16 is expected to be £813 per week (£42,285 per annum); employer NIC will be liable as normal beyond this limit. The saving to the employer will be £500 where an employee earns £12,000 per annum and £1,000 where an employee earns £16,000 per annum.

The aim of the policy is to encourage employers to employ individuals under the age of 21. Under current law, employers are liable to Class 1 secondary NICs on all earnings paid to employees over the age of 16 provided their earnings exceed the secondary threshold which is currently £148 per week.

This move follows the introduction of the Employment Allowance of £2,000 per year for all businesses and charities, to be offset against their employer Class 1 secondary NICs liability from April 2014.

Posted byAudrey MooneyinHMRCPayroll