April 28 2015.

From 6th April 2015, employers with employees under 21 years of age will no longer have to pay Class 1 secondary National Insurance Contributions (NICs) on earnings up to the Upper Secondary Threshold (UST) for those employees.

The zero rate won’t apply to Class 1A or Class 1B NICs. Class 1 secondary NICs will apply if the employee is earning above the UST.

If you employ someone aged over 16 but under 21 you’ll have to choose 1 of the 7 new National Insurance categories when assessing their secondary NICs. It’s the employer’s responsibility to ensure the correct category letter has been applied based on the age and circumstances of the employee.

The current rate of secondary Class 1 NICs for the tax year 2014 to 2015 is 13.8% per cent on earnings above the Secondary Threshold (ST) of £153 per week - or its equivalent for pay periods that are longer than 1 week.

From April 2015 that rate is reduced to 0 per cent for those employees who are under the age of 21 with earnings between the ST and the UST.

Employees will continue to pay the standard rate of primary Class 1 NICs through their salary. They won’t see any reduction in their payments as it is the employer who will benefit from this change. Employee’s entitlement to contributory social security benefits, including State Pension won’t be affected. Existing employees may notice a change to the National Insurance category letter recorded on their payslip.

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