If you’re a non-levy employer in the UK hiring apprentices, there’s good news: you don’t have to pay National Insurance Contributions (NICs) for apprentices under the age of 25. This incentive is designed to make hiring apprentices more affordable and encourage businesses to invest in young talent.
In this blog, we’ll explain how the exemption works, who qualifies, and how your business can benefit.
What is the Apprentice NICs Exemption?
Since April 2016, employers in the UK have been exempt from paying Class 1 (employer) National Insurance Contributions for apprentices under 25. This applies to earnings up to the Upper Earnings Limit (£967 per week in 2024/25 or £50,270 a year).
This means if you employ an apprentice aged 16-24, you won’t pay the usual 13.8% employer NICs on their wages, significantly reducing your payroll costs.
Who Qualifies for the Exemption?
To benefit from this exemption, the following conditions must be met:
✅ The apprentice must be under 25 when their apprenticeship begins.
✅ They must be on an approved apprenticeship standard or framework.
✅ Their earnings must be below the Upper Secondary Threshold (£967 per week in 2024/25).
Both levy-paying and non-levy employers can claim this exemption, but it’s particularly valuable for smaller businesses that don’t pay the Apprenticeship Levy.
How Does This Benefit Non-Levy Employers?
Non-levy employers fund apprenticeship training through co-investment (paying 5% of training costs, with the government covering 95%). However, the NICs exemption provides an additional financial incentive by reducing employment costs.
Example Savings:
- Apprentice Salary: £18,000 per year (£1,500 per month)
- Employer NICs (without exemption): £1,500 x 13.8% = £207 per month
- With exemption: £0 NICs
Over a year, this could save your business £2,484 per apprentice—money that can be reinvested in training or growth.
How to Claim the Exemption
You don’t need to apply separately—the exemption is applied automatically through HMRC’s payroll system. Ensure:
✔ Your apprentice is enrolled in an approved apprenticeship.
✔ Their age and earnings are correctly reported in your payroll software.
✔ You use the correct apprenticeship NI category letter (H for under 25 apprentices).
If using manual payroll, consult HMRC guidance or speak to your accountant.
Additional Support for Non-Levy Employers
Beyond NICs savings, non-levy employers can also benefit from:
- £1,000 government incentive (for hiring apprentices aged 16-18 or 19-24 with an EHC plan).
- 95% government funding for apprenticeship training costs.
Final Thoughts
Hiring an apprentice is a cost-effective way to grow your business while developing skilled workers. The NICs exemption for under-25 apprentices makes it even more attractive for non-levy employers.
If you’re considering hiring an apprentice, now is a great time to take advantage of these savings and support schemes.
Need help with apprenticeship funding? Check the gov.uk apprenticeship funding rules or speak to us Award Winning Early Years Training Provider and Apprenticeships | Eden TS
