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In the Budget announced by the new Labour Government in 30th of October 2024, there were some huge changes that would effect all businesses. One in particular was around National Insurance Contributions from Employers. The government said employer contributions were going to increase from 13.8 % to 15%, and that the secondary threshold is to be changed from £12,000 to £5,000.
Apprenticeships are already a cost-effective way to bring on new young talent and develop them. But also, anyone on an apprenticeship, who is under 25 years old, and earns an annual salary of £50,000 or under, the employer does not have the pay their national insurance contributions. This can lead to huge savings, for new staff and any current staff who could be placed on an apprenticeship.
• 19 year old Apprentice.
• First job.
• 37.5 hours per week at National Minimum Apprentice Wage of £7.55
per hour.
• 19 year old Non Apprentice.
• First job.
• 37.5 hours per week at National Minimum Wage of £10 per hour.
• 23 year old employee.
• 37.5 hours per week at National Minimum Apprentice Wage of £12.21
per hour.
Scenario 1 £
Scenario 2 £
Scenario 3 £
£14,722.50
£19,500.00
£23,809.50
–
£2,175.00
£2,821.43
£14,722.50
£21,675.00
£26,630.93
Remember you are only saving the National Insurance Contributions, so for Scenario 3 that is £2,821.43 that you would not have to pay.
An organisation could potentially look at current members of staff that would benefit from training, as apprenticeships are available for everyone and go from Level 3 (A-Level) all the way up to Level 6 (Degree level). Across multiple members of your team this could be a large saving.
With the new wage increases across all minimum wages and the increases in NIC. These savings could be essential for a business looking to grow.