How apprenticeships can save UK employers £1,000’s amid rising national insurance costs

With changes announced in the Autumn Budget 2024, businesses are preparing for a significant rise in National Insurance Contributions (NICs) starting April 2025. The employer NIC rate will increase from 13.8% to 15%, and the secondary threshold will drop from £9,100 to £5,000. These changes are expected to put financial strain on businesses, especially in sectors like care, childcare, and FMCG. 

The challenge ahead: NIC raises likely to make it more difficult for businesses

The increase in NICs will lead to higher employment costs for businesses, making it more challenging to maintain profitability.

Small and medium-sized enterprises, which often operate with limited financial buffers, are likely to feel the impact the most. Many businesses are already considering measures such as price increases or workforce reductions to manage these additional costs.

Mitigate the impact of rising NICs by hiring apprentices under 25

Apprenticeships offer a strategic solution to reduce your employer NIC burden and provide long-term benefits for your business.

By hiring apprentices under 25, you are exempt from paying Class 1 NICs for those earning less than £967 per week. This exemption can result in substantial annual savings, which can be reinvested in other critical areas of your business, such as technology, expansion, or staff development.

If you have overpaid NICs for apprentices in the past, you can reclaim up to six years of contributions using a government tool. This recovery can provide unexpected financial relief, helping to offset the increased NIC costs.

Additionally, hiring apprentices aged 16-18, or those aged 19-24 with an Education, Health, and Care Plan (EHCP) or care experience, may qualify you for a £1,000 grant to help offset workplace costs. This financial support is a valuable benefit, allowing you to invest more in your apprenticeship programmes. 

The savings could be huge, here’s some illustrations to help bring this to life:

Annual salary Your NIC at 15% With an apprentice Annual saving
£20,000  £2,400  £0.00  £2,400 
£25,000  £3,000  £0.00  £3,000 
£30,000  £3,600  £0.00  £3,600 

More than savings: building a future-proof workforce

Apprenticeships offer more than just financial savings. They attract motivated talent eager to learn and align with your company culture. By training apprentices, you nurture future leaders, creating a skilled, dedicated workforce that understands your business from the ground up.

Take the first step to reduce your NICs today

Talk to us today about how we can help you identify apprenticeship programmes that align with your business's objectives and career pathways, building a solution that covers your entire organisation, to help reduce your National Insurance Contributions as much as possible.

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