How Much Employer National Insurance Can You Save by Employing an Apprentice?

Employer National Insurance can be a real factor when you are planning a hire. Salary is only part of the total cost, and payroll contributions can make a difference when you are budgeting carefully. For qualifying apprentices under 25, however, the employer NI position is different: the employer secondary rate can be 0% up to the apprentice upper secondary threshold.

If you are comparing recruitment options, that can make an apprentice more affordable than a similar non-qualifying employee. It is worth separating the NI saving from apprenticeship training funding and any hiring payment, because each support has its own rules.

How the employer NI relief works

In 2026/27, the standard employer secondary Class 1 National Insurance rate is 15% above the Secondary Threshold. HMRC’s tables set the monthly Secondary Threshold at £417.

For a qualifying apprentice under 25, the employer secondary rate is 0% on earnings up to the Apprentice Upper Secondary Threshold. Above that threshold, standard employer NI can apply to the excess. This is a payroll relief for the employer, not a change to the apprentice’s own tax or National Insurance position.

The important point is that this is not a blanket exemption from all payroll costs. It is a specific rate relief that applies while the apprentice meets the conditions.

What kind of saving can this create?

The size of the saving depends on pay. Using the 2026/27 thresholds, the annual employer NI saving on a salary of £20,000 is approximately £2,249 before any Employment Allowance or other payroll reliefs.

As an illustration, that same method gives rough annual savings of:

• about £1,649 on £16,000
• about £2,249 on £20,000
• about £2,999 on £25,000
• about £3,749 on £30,000

These are planning figures, not payroll outcomes. Actual National Insurance is calculated by pay period, so the final result can vary if pay is irregular or if circumstances change during the year.

It is also important to compare like with like. If you are hiring someone under 21, employer NI relief may already apply under the under-21 category. In that case, an apprenticeship does not automatically create an extra NI saving compared with another qualifying under-21 employee.

Who qualifies for the relief?

To use the apprentice under-25 employer NI category, the employee must meet the relevant conditions at the time the earnings are paid. In practice, that means the apprentice should:

• be under 25 when the relevant pay is processed
• be on a government-recognised apprenticeship
• have a written apprenticeship agreement
• still be on the apprenticeship for the period you are claiming relief

HMRC also expects employers to keep evidence of the agreement, including the apprenticeship standard or framework, the start date and the expected completion date.

The relief can apply to both new and existing apprentices, provided the conditions are met.

Is this only for smaller employers?

No. The NI relief is separate from apprenticeship funding and is not limited to non-levy employers. Levy-paying and non-levy employers can both benefit from the employer NI rules if the apprentice qualifies.

That distinction matters because apprenticeship funding rules are different. NI relief is a payroll issue; training funding is a separate apprenticeship funding issue.

Can NI relief be combined with other support?

Yes, but each support must be checked separately.

For apprenticeship training in England, GOV.UK says eligible training and assessment costs can be funded up to the relevant funding band maximum. That support is different from employer NI relief.

For non-levy employers in England recruiting new apprentices from 1 October 2026, GOV.UK also says a hiring payment of up to £2,000 may be available, subject to the funding rules. The apprentice must have started work with the employer within the previous three months, and the payment is made in instalments.

There may also be a separate £1,000 payment for certain apprentices aged under 25, including those aged 16 to 18, or those under 25 who are in care, have been in care, or have an education, health and care plan.

A useful way to think about it is this:

• NI relief reduces payroll cost where the apprentice qualifies
• apprenticeship funding can reduce training cost
• hiring payments may help with recruitment cost where the rules are met

Those supports can sit alongside one another, but they are not interchangeable.

Why the apprentice should come before the incentive

Financial support is helpful, but it should not be the main reason to hire someone. A good apprenticeship still needs a genuine job, clear duties and enough support for the apprentice to learn properly.

If you already have a role that needs developing skills, an apprenticeship may be a practical way to fill it. If you do not have a real business need, the savings alone should not drive the decision.

A simple test is to ask whether you would still want the role if no funding or NI relief were available. If the answer is yes, the apprenticeship route may be worth exploring.

Wider benefits of employing an apprentice

The NI saving is only one part of the value. Employers often use apprenticeships to:

• build skills around their own business needs
• recruit for potential rather than perfect experience
• support succession planning
• tackle skills gaps in specific teams
• create a development path for future staff

Those benefits are not guaranteed, and they depend on good management and realistic expectations. But when the role is well planned, apprenticeships can be a practical part of workforce development.

How the NI relief is claimed in payroll

HMRC’s category letters show that employers normally use category H for apprentices under 25. Payroll software may handle this automatically, but the employer is still responsible for using the correct category and keeping the right evidence.

Because age, pay pattern and apprenticeship status all matter, it is sensible to confirm the treatment with a payroll adviser or accountant if you are unsure. Where a worker is near the age limit or moves on or off an apprenticeship during the year, the payroll treatment may need to change.

How CMS Vocational Training can help

If you are thinking about employing an apprentice, CMS Vocational Training can support employers through the process. That can help when you are deciding whether a role suits an apprenticeship, choosing a route and planning the recruitment process.

Good planning matters because the strongest outcomes come when the job, the training and the business need all line up. If they do, the NI saving can be part of a wider case for hiring and developing new talent.

Frequently asked questions

Do employers pay National Insurance for apprentices?

Yes, but qualifying apprentices under 25 can attract a 0% employer secondary rate up to the apprentice upper secondary threshold.

How old must an apprentice be to qualify?

The apprentice must be under 25 when the relevant earnings are paid.

Does the relief apply to existing staff?

Yes, it can apply to existing employees if they meet the apprenticeship and age conditions.

What happens when an apprentice turns 25?

The relief normally stops when the apprentice turns 25 or leaves or completes the apprenticeship.

Can the NI relief be combined with funding support?

Potentially, yes. NI relief, apprenticeship training funding and hiring payments are separate and may all be relevant, depending on the case.

Which NI category is normally used?

Employers normally use NI category H for apprentices under 25.

Employing a qualifying apprentice under 25 can reduce your employer NI bill and improve the overall cost of recruitment. The exact saving depends on salary, payroll timing and whether any other reliefs apply.

If you are planning a hire, it is worth checking whether the role could work as an apprenticeship and whether the apprentice would qualify for the NI relief. For many employers, that is enough to make the numbers worth a closer look.