A new incentive to employers to employ under 21’s.

As the Government gradually reforms the UK benefits system, school leavers will no longer be able to leave school and immediately claim unemployment benefit. All young persons will be expected to either go into further education, a training scheme or employment.

Proposals have been made to abolish Class 1 secondary National Insurance Contributions from 6th April 2015, to enhance the employment of under 21’s. The contribution will no longer be payable by employers for the proportion of their work force under 21 years with earnings up to the upper earnings limit (UEL).

Currently Class 1 secondary National Insurance Contributions are payable at 13.80% on all earnings exceeding the secondary threshold (ST). For this tax year 2013/14 the ST threshold is set at £148 per week.

The new proposals for 2015/16 should see the upper earnings limit set at £813 per week. For employers this means that as long as their employee is under 21 years and earns less than the UEL (£813 per week) they, the employer, will not have to contribute to their employee’s NIC’s.

Do the math!!

Initially this is going to be quite a saving for employers.

The decision to remove the payment of class 1 secondary Nic’s for the targeted age group of young people could be a good move by the government. The knock on effect should see more employment of school leavers and younger workers. This in itself can only be a good thing giving vital experience and training to our next generation work force.

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