HMRC announces details of NI break

The 2014 Budget included a new NI break for employers with young workers.  What steps are needed for your company to take advantage of it?

Budget Recap. Among several measures intended to encourage companies to take on young workers, the chancellor announced that employers’ NI contributions would be scrapped for certain employees, but not until April 2015.  With that date on the horizon HMRC has released details of how the NI break will work in practice.

Age Limit.  Where one of your employees is aged 20 or under on any payday after 5th April 2015, your company won’t be liable to pay employers’ NI contributions.  HMRC has made it clear that it’s your responsibility as the employer to ensure that you have a record of your employees’ correct dates of birth.

Income Limit. The NI exemption will apply only to earning up to the newly introduced limit called the upper secondary threshold (UST).  The UST will be set at the same level as the NI upper earning limit.  This is currently £805 per week (£3,488 per month), but it may change in April 2015.  In the unlikely event that you pay an under-21 year old more than that you’ll have to pay employer contributions at the usual rate, i.e 13.8% on the excess over the UST.

Payroll software will handle the NI break automatically.  However, you must enter a special NI category on payroll records for those aged 20 or under, and obtain proof of their date of birth, e.g. a copy of their birth certificate.

Please do not hesitate to contact Karen Laverty on 0141 643 9200 for advice.