With the recent increase in National Insurance Contributions (NICs), UK businesses are facing significant financial pressures. Employers are now seeking effective strategies to manage these escalating costs without compromising their workforce quality. One viable solution is the strategic employment of apprentices, particularly those under the age of 25, which can lead to substantial NIC savings and long-term benefits for businesses.
Understanding the Impact of National Insurance Contribution Increases
In the latest fiscal adjustments, the UK government has raised the employer NIC rate from 13.8% to 15%, effective from April 2025. Additionally, the secondary threshold has been lowered from £9,100 to £5,000. These changes mean that employers will incur higher costs for each employee earning above the new threshold, intensifying financial pressures across various sectors.
Financial Benefit of Hiring Apprentices Under 25
Employing apprentices under the age of 25 offers a strategic avenue for employers to alleviate the impact of increased NICs. Since April 2016, the government has abolished employer NICs for this demographic, provided they are enrolled in an approved apprenticeship programme and earn less than £967 per week (£50,270 annually).
Here’s a visual breakdown of what this looks like:
| Annual Salary | NIC at 15% | NIC with Apprentice | Annual Saving |
| £25,000 | £3,000 | £0 | £3,000 |
| £30,000 | £3,600 | £0 | £3,600 |
| £35,000 | £4,500 | £0 | £4,500 |
These figures demonstrate that hiring apprentices can save thousands of pounds per year, depending on the apprentice’s salary, which can be redirected towards other critical business operations.
Additional Financial Incentives
Beyond NIC exemptions, employers may be eligible for further financial support:
- Government Grants: Employers hiring apprentices aged 16-18, or those aged 19-24 with an Education, Health, and Care Plan (EHCP) or who have been in care, may receive a £1,000 grant to offset workplace costs.
- Reclaiming Overpaid NICs: Businesses that have previously overpaid NICs for apprentices can reclaim up to six years of contributions, providing unexpected financial relief.
- Apprenticeship Levy: If you run a smaller business, the government will cover 95% of apprentice training costs. For businesses with a £3 million payroll, the apprenticeship levy can fund training.
Strategic Benefits Beyond Financial Savings
While the immediate financial incentives are compelling, there are also many other business benefits to hiring apprentices, as well as long-term strategic advantages, here are just a few:
- Talent Development: Apprenticeships enable businesses to cultivate a skilled workforce tailored to their specific needs, fostering loyalty and reducing recruitment costs.
- Enhanced Productivity: Investing in apprenticeships can lead to increased productivity as employees are trained in the latest industry practices and technologies.
- Corporate Social Responsibility: Supporting apprenticeships demonstrates a commitment to social responsibility, enhancing the company’s reputation and appeal to socially conscious consumers and partners.
Implementing an Apprenticeship Strategy
To effectively integrate apprenticeships into your workforce and capitalise on NIC savings:
- Identify Suitable Roles: Assess your organisational structure to determine positions where apprentices can be effectively utilised.
- Partner with Accredited Training Providers: Collaborate with reputable apprenticeship training providers to ensure high-quality education and compliance with government standards.
- Understand Eligibility Criteria: Ensure that the apprenticeships align with approved UK government standards or frameworks and that apprentices meet the age and wage criteria for NIC exemptions.
- Monitor and Support Apprentices: Provide ongoing mentorship and support to apprentices to maximise their development and integration into the company.
In the face of rising National Insurance costs, UK employers must explore innovative strategies to maintain financial stability. Employing apprentices under the age of 25 presents a dual opportunity: achieving significant NIC savings while investing in the development of a skilled and loyal workforce. By strategically implementing apprenticeship programmes, businesses can navigate financial challenges and position themselves for sustainable growth in a competitive market.
Take the first step to lowering your NICs with Whyy? Change
Whyy? Change is your strategic partner in unlocking significant savings and driving growth through apprenticeships. With an impressive overall achievement rate of 76.3% and a 100% pass rate for apprentices. Whyy? Change is an accredited training provider that stands out as South Yorkshire’s leading independent training provider, offering internationally recognised qualifications in Leadership (CMI), HR (CIPD), Marketing (CIM), Lean & Six Sigma, and Quality HSE.
By expertly matching the right learner with the ideal apprenticeship programme, we ensure your team thrives and your business flourishes. Our tailored programmes exceed national averages across multiple apprenticeship standards, showcasing our commitment to delivering high-quality training and development.
Let’s collaborate to design bespoke apprenticeship pathways that perfectly align with your team’s needs, propelling your business towards unparalleled success.
To start transforming your workforce and begin achieving significant savings, get in touch by filling out the form below.
