Cutting the cost of employing younger workers

6 April 2015 sees an important payroll change for anyone employing a member of domestic staff under the age of 21.  From that date, employers’ Class 1 secondary National Insurance Contributions (NICs) will have been abolished.

For those of you who use a payroll service, it’s only important to remind your service if you have staff under that age, giving their names and ages.

For those of you who undertake this task yourselves, there are important new changes and categories to be aware of, with full details available at https://www.gov.uk/government/publications/employer-national-insurance-contributions-for-under-21s/abolition-of-employer-national-insurance-contributions-for-under-21s-employer-guide

The cut in NIC is restricted to those who earn up to the newly introduced Upper Secondary Threshold (UST), which equals the Upper Earnings Limit (UEL) in 2015-16 of £815 a week or £42,385 a year.

The measure is intended to encourage individuals and businesses to employ younger people; but what does it mean to you in terms of saving in a year?

For someone earning a salary of £12,000 a year, the saving for you as the employer will be some £500 a year, and for someone earning £16,000 a year, the saving for you will double to £1,000.

There are several new categories of employment, and depending on which your staff member falls within, a different National Insurance category will apply.

Our recommendation, as in all such matters, is to take profession al advice.  For those clients who have sourced their staff through The Graham Agency, a professional payroll service provider is available to undertake all the work for you.