As part of our ever-more-complicated tax and National Insurance system, there have been some changes to do with young people and NI, and they can be easy to miss.
Generally, an employer has to pay Employer's National Insurance in respect of all employees (for a monthly paid employee the first £720-ish attracts no NI, but the employer must pay NI at 13.8% on everything after that). There are some exceptions to this, though. Two of the more recent ones are:
- The employer pays no NI at all where an employee is under 21, and
- The employer pays no NI at all where an employee is under 25 AND an apprentice
The first one is hard to miss, because even if you aren't conscious of it, your payroll software should pick it up anyway.
The second definitely is easy to miss though - your payroll software isn't going to know that the employee is an apprentice, and if you outsource your payroll prep then the bureau isn't going to know either. It's made more difficult by the proliferation of apprentices where you don't expect them. It used to be the case that most apprentices were probably under 21 anyway, so would just fall under the first category in any case. Not now - apprenticeships are available in a broader range of industries and to a broader range of people. For example, the majority of trainee Chartered Accountants are now apprentices, and few of them are under 21.
So, if you've got apprentices aged 21 to 24 being paid more than £720 a month, be careful! If you don't take positive steps to reflect that in your payroll, you'll pay more NI than you have to.