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NICs Abolished for Under 21s

Back in the 2013 Autumn Statement it was announced that from April 2015 there would be no employer National Insurance Contributions (NICs) due on earnings up to the upper earnings limit for all employees under the age of 21.

This NIC relief covers both existing employees and to all employers taking on new staff. With this change there will be no difference in the individual’s state pension entitlement.

This measure is intended to encourage more youth employment thus boosting economic growth and development. They estimate that employers should save over £500 for every 21 year old earning £12,000.

The change is expected to lift an estimated 1.5 million workers out of employers NICs. Although employees aged 16-20 will still be required to pay employees NICs on their salary.

For those who operate payroll they will need to be aware that new NI category letters will apply for affected employees from April 2015.

Only Class 1 NICs are affected by the change, not Class 1A or 1B. So if an employee is in receipt of a taxable benefit; for example a company car, the employer will still be liable for the employee’s Class 1A NICs on that benefit.

If you would like to know how the abolishment of NICs for under 21s may affect your business contact our Manchester accounting team on 0161 832 4451 or email