NIC exemption for employers of apprentices

Mon 14 Sep 2015

The promise in the 2014 Autumn Statement of an exemption from employer’s NIC on apprentices’ earnings provoked a flurry of speculation about the possible scope of the measure but what we have is what the realists/pessimists expected: strict limitation to Government-favoured apprenticeship schemes.

From 6 April 2016 employers will be able to claim an NIC exemption in respect of apprentices aged under 25 whose earnings are below the Upper Earnings Limit.
Hopes that the definition of ‘relevant apprentice’ would extend to a wide range of traineeships were finally quashed in a consultation document makes it clear that exemption :
• will apply to apprenticeships in the UK which follow government arrangements or approved frameworks, including frameworks or standards recognised by the Skills Funding Agency in England and apprenticeship frameworks approved by the Welsh, Scottish and Northern Ireland governments;
• won’t apply to apprenticeships outside government approved frameworks, also known as common law apprenticeships; and
• written agreements will be required between the training provider, apprentice and employer, specifying the applicable government recognised apprentice framework or standard, with a start and expected completion date

Employers will need to retain copies of these agreements as evidence to validate the NIC exemption.
The consultation closes on 18 September 2015 and detailed guidance on the definition of ‘relevant apprentice’ and how to apply the NIC exemption through the payroll is expected in January 2016.