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The abolition of employer National Insurance contributions (NICs) on young trainees is a “great idea” made at the “right time”, according to commentators inside and outside the tax sector.
Chancellor George Osborne this afternoon announced that firms will no longer have to pay NICs on earnings up to the upper earnings limit for apprentices under 25 years old.
The abolition of employer National Insurance contributions (NICs) on young trainees is a “great idea” made at the “right time”, according to commentators inside and outside the tax sector.
Chancellor George Osborne this afternoon announced that firms will no longer have to pay NICs on earnings up to the upper earnings limit for apprentices under 25 years old.
His autumn statement measure was greeted with enthusiasm by the head of taxation at the Association of Chartered Certified Accountants, Chas Roy-Chowdhury. He said, “Income tax and National Insurance need to be aligned; the divergence between them can cause distortions. Parity is needed – but we welcome abolishing the jobs tax on apprenticeships under 25. It is a great idea.”
The chancellor believes the measure will see employers of around half a million apprentices become exempt from paying employer NICs.
John Harding, employment tax partner at PwC, hailed a “further boost to youth employment [that] will enable employers to invest the savings they make in training and development, or even more jobs.
“For an employer with 100 apprentices earning around £22,500 a year, the overall saving could exceed £200,000 per year.”
The managing director of leading recruitment firm Retail Human Resources also welcomed the news. Peter Burgess said, “This is the right time to make such a change. We’ve heard from the chancellor about how SMEs are the lifeblood of the UK economy. Abolishing employer NICs for apprentices aged under 25 will help increase competitiveness and have a direct impact on job creation.”
Small business also had its say. The MD of Worthing-based plumbing & heating company Gas, Jamie Standing, suggested that encouraging firms to offer apprenticeships “could send a shockwave through youth unemployment figures”.
He added, “The reason companies don’t take on apprentices at the moment is because it costs too much money… but businesses want to help youngsters. They want skilled workers coming through, and they want to get youngsters off the streets.”
