New guidance has been published for employers regarding the abolition of National Insurance Contributions (NICs) for employees between the ages of 16 and 21. The changes will apply from 6 April 2015.

From 6 April 2015, employers with employees under 21 years old will no longer have to pay Class 1 NICs on earnings up to the Upper Secondary Threshold (UST). 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.

Employees will continue to pay the standard rate of primary Class 1 NICs on their salary. There will be seven new National Insurance categories for employers to use when assessing their secondary NICs. It will be the employer’s responsibility to ensure the correct category letter has been applied based on the age and circumstances of the employee.