The measure

Employers' National Insurance Contributions (NICs) will be abolished for under-21 year olds earning less than £813 per week, equivalent to the point at which higher rate tax is charged. The Government expects that nearly 1.5 million under-21 year olds will be lifted out of employer NICs completely, with an average saving of £355 per employee. No individual's state pension entitlement will be affected by this measure. The measure will be introduced into the current NIC Bill before the Third Reading on 10 December 2013.

Who will be affected?

Employers of employees under the age of 21 who earn less than the upper earnings limit (UEL). The UEL is forecast to be £42,285 (annualised) in 2015-16. It will apply to both existing employees and to employers taking on new staff.


From April 2015.

Our view

The measure will make it cheaper for businesses to employ under-21 year olds and as such is a welcome relief. Employee contributions for under-21s remain at the existing rates.

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