As a new tax year begins, it is official that National Insurance contributions are up, and these increases affect both employees and employers. Costs are going up everywhere – fuel, raw materials, tax. This blog will highlight how employers can save money on national insurance contributions, by using apprenticeships.
Outline of the changes
From April 2022 the following changes have occurred:
- Employer National Insurance Contributions have risen to 15.05%. Up from 13.8%.
- Employees paying class 1 contributions (which start on earnings over £187 per week), will now pay 12% NI, then 2% on all earnings over £976 per week.
- Self-employed individuals have also seen increases.
How employers can use apprenticeships to minimise NI contributions
To incentivize employers to invest in apprenticeship training – the government has removed the need for employers to pay national insurance for employees under the age of 25.
The abolition of employer contributions for apprentices under the age of 25 has been in place since April 2016 and adds to the already great benefits of having an apprentice in your organisation. The rationale behind this policy decision was to support youth employment and over the last 6 years, apprenticeships have certainly done that. According to official government statistics, 1,839,690 people have started apprenticeships between 2016/18 to 2020/21 (gov.uk)
There are two ways apprenticeships can be used by a company to benefit from the NI saving:
Method 1 – Recruit a new employee under 25
The Apprentice Academy offers employers business administration and accountancy training for apprentices looking to enter the world of work. We work with over 40 schools and colleges in the Northwest. More and more young people see it as a valuable alternative to university. Our Future Talent programme matches employers with these young people based on a variety of criteria. When they finish their exams in the summer, they are ready to enter the world of apprenticeships!
The Academy also offers a ‘Recruit Direct’ service for employers outside the Northwest.
Find out about the recruit direct service and how to recruit an apprentice here.
Method 2 – Enrol a current employee under 25 on a programme
Apprentices don’t have to be new recruits. Anyone can do an apprenticeship, providing they meet the following eligibility criteria:
- Be aged 16 or above (No upper age limit)
- Must not already be studying any other government funded learning / qualification or apprenticeship. This includes degree (student loan accessing government funding already)
- Must not have a higher qualification in the same subject area as the apprenticeship they wish to commence.
- Have the right to work in England
- Be a UK National or an individual with the Right of abode in the UK – this includes: People who have been granted pre-settled status, or people with refugee status (RS), humanitarian protection (HP) or discretionary leave (DL).
If you believed that someone would benefit from an apprenticeship training experience, they can enrol. There are 5 areas of study at The Academy:
- Leadership and Management
- Business Administration
- and Housing/Property Management
We hope this blog has provided some good news for your recruitment strategies moving forward. If you want to talk to us about apprenticeships, you can contact us here.