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

Employer National Insurance for apprentices can be an important part of your recruitment budget. When you are planning a hire, salary is only one part of the cost. Employer National Insurance can add a meaningful extra amount to payroll, especially when you are building a team and every pound matters. For qualifying apprentices under 25, however, the rules are different: employers can pay a 0% employer National Insurance rate on earnings up to the apprentice upper secondary threshold. That can mean an ongoing saving worth thousands of pounds across a year, alongside other apprenticeship support that may be available.

For employers in England, that makes apprenticeships worth considering not only as a route into skills development, but also as a practical recruitment option. The key is to understand who qualifies, how the saving works, and how National Insurance relief for apprentices may sit alongside apprenticeship funding and employer incentive payments.

Employer National Insurance for apprentices: how the relief works

Under HMRC’s 2026–27 rates and thresholds, employers ordinarily pay 15% Class 1 secondary National Insurance on an employee’s earnings above the Secondary Threshold. The monthly Secondary Threshold is £417.

For qualifying apprentices under 25, the employer National Insurance position changes. On earnings up to the Apprentice Upper Secondary Threshold of £4,189 per month, the employer rate is 0%. Above that point, standard employer National Insurance applies to earnings above the threshold.

This is best understood as a zero rate for qualifying apprenticeship earnings, not as a blanket removal of every payroll obligation. It affects employer National Insurance only. It does not remove any employee National Insurance the apprentice may need to pay.

How much could an employer save?

The savings depend on salary. The following figures are rounded illustrations using 12 monthly pay periods and the £417 monthly secondary threshold. They compare a qualifying apprentice aged 21–24 with an employee of the same age on the standard employer NI rate, before any Employment Allowance. Actual payroll calculations are made by pay period, so the exact amount may vary with circumstances and the way pay is structured.

A useful example is a qualifying apprentice paid £20,000 a year. Over a full year, the employer could save approximately £2,249 in employer National Insurance. That is not a one-off grant; it is an ongoing payroll saving that continues while the apprentice remains eligible.

The saving can be even more valuable when you are recruiting for a role you already planned to fill. Instead of treating the relief as a bonus, think of it as part of the real employment cost comparison between hiring an apprentice and hiring a non-qualifying employee on the same salary.

Employees under 21 already qualify for a separate 0% employer NI rate up to the upper secondary threshold, whether or not they are apprentices. An apprenticeship therefore does not create an additional NI saving over an otherwise equivalent employee under 21. Employment Allowance may also reduce the employer’s actual bill. See HMRC’s employer guidance on National Insurance reliefs.

Who qualifies for the relief?

To use the 0% employer National Insurance rate, the apprentice must meet the relevant conditions at the time the earnings are paid. In general, the employee must:

• be under 25 when the relevant earnings are paid
• be undertaking an approved apprenticeship
• have an appropriate apprenticeship agreement
• remain on the apprenticeship during the period for which relief is claimed

The relief can apply to new and existing qualifying apprentices, and it is available to both levy-paying and non-levy employers.

It normally ends when the apprentice turns 25 or completes or leaves the apprenticeship. Employers should also retain evidence of the approved apprenticeship agreement. The written agreement should identify the apprenticeship standard, start date and expected completion date.

Is this only for smaller employers?

No. The relief is not restricted to small employers, and it is not limited to businesses that do not pay the apprenticeship levy. Both levy-paying and non-levy employers can benefit if the apprentice meets the conditions.

That said, other support can depend on employer size, apprentice age and whether the apprentice is new to the business. So it is sensible to separate the National Insurance saving from any additional funding or incentive payment and check each element on its own merits.

Can National Insurance relief be combined with other support?

Yes, potentially. The main financial advantage is that the employer National Insurance saving can sit alongside other apprenticeship support, subject to the eligibility rules for each scheme.

For new apprentices aged 16–24, eligible training and assessment costs can be fully funded up to the relevant funding band maximum. That can significantly reduce the cost of developing new staff.

From 1 October 2026, qualifying non-levy employers recruiting a new apprentice aged 16–24 can receive an additional hiring payment of up to £2,000, subject to the government’s apprenticeship funding conditions. A separate £1,000 payment may be available when employing an apprentice aged 16–18, or an eligible 19–24-year-old with an education, health and care plan or care experience.

A worked example helps show how these elements can add up. A qualifying non-levy employer recruiting a new 24-year-old apprentice on £20,000 could potentially receive the £2,000 hiring payment and save approximately £2,249 in employer National Insurance during the first year. That represents a potential combined benefit of approximately £4,249, in addition to fully funded eligible apprenticeship training.

Each element has its own eligibility conditions, and payments are not necessarily received immediately. Employers should treat them as separate supports, not as an automatic package.

Why the apprentice should come before the incentive

Financial support is useful, but it should never be the only reason to hire an apprentice. The strongest apprenticeship outcomes come from a good job match, sensible duties and proper workplace support.

An apprentice should have a genuine role, enough support to learn, and opportunities to build occupational competence over time. The business should be hiring for a real need, not inventing a post simply to access funding or relief.

A practical way to think about it is this: if you already know you need an entry-level or developing member of staff, ask whether that role could be structured as an apprenticeship. If the answer is yes, the funding and NI relief may improve the commercial case without changing the fact that the person must be the right fit for the job.

Wider benefits of employing an apprentice

Employer National Insurance for apprentices is only one part of the picture. Many organisations value apprenticeships because they can support wider workforce planning.

Employers often use apprenticeships to:

• recruit for potential rather than waiting for perfect experience
• shape skills around the needs of the business
• build a pipeline for succession planning
• address skills shortages in specific teams
• bring fresh perspectives into established processes
• improve long-term staff development through structured learning

These benefits are not guaranteed. An apprenticeship still needs time, management and good training to work well. But for employers with a long-term recruitment strategy, it can be a very practical way to grow capability inside the business.

How does the employer claim the NI relief?

In payroll, the employer or payroll provider will normally use National Insurance category H for a qualifying apprentice under 25. The employer should keep the apprenticeship agreement and make sure the payroll treatment is correct.

Because payroll and eligibility can be affected by the apprentice’s age, earnings pattern and apprenticeship status, it is sensible to confirm the treatment with an accountant, payroll adviser or HMRC. The relief is straightforward in principle, but it should still be checked carefully in practice.

How CMS Vocational Training can help

If you are considering an apprentice, CMS Vocational Training can support employers through the process from first conversation to recruitment and delivery.

That can include:

• helping you select an appropriate apprenticeship
• offering a free apprentice recruitment service
• advertising your vacancy and helping identify suitable candidates
• supporting Apprenticeship Service and funding arrangements
• delivering training fully online across England
• maintaining regular tutor contact and progress reviews
• providing dedicated employer account management and support

That matters because the financial benefit is strongest when the apprentice role, the training standard and the business need are all aligned. CMS can help employers think through those practical decisions before recruitment begins.

If you are planning a hire and want to compare the cost of a standard employee with the cost of employing an apprentice under 25, the team can help you explore whether there is a suitable apprenticeship route.

Frequently asked questions

Do employers pay National Insurance for apprentices?

Yes, employers may still pay National Insurance for apprentices depending on the rules that apply. For qualifying apprentices under 25, the employer rate is 0% on earnings up to the apprentice upper secondary threshold. Employer National Insurance may still apply above that threshold.

How old must an apprentice be to qualify for the 0% rate?

The apprentice must be under 25 when the relevant earnings are paid and must be undertaking an approved apprenticeship.

How much National Insurance could an employer save?

It depends on salary. Based on the 2026–27 thresholds supplied, a salary of £20,000 could produce an illustrative annual employer saving of about £2,249.

Does the relief apply to existing employees?

Yes, it can apply to new and existing qualifying apprentices, provided the other conditions are met.

What happens when an apprentice turns 25?

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

Can NI relief be combined with the £2,000 hiring payment?

Potentially yes, if the employer and apprentice meet the relevant conditions. The hiring payment is separate from the National Insurance relief and has its own eligibility rules.

Which payroll category should employers use?

Employers will normally use National Insurance category H for a qualifying apprentice under 25.

Can CMS help recruit an apprentice?

Yes. CMS Vocational Training offers a free apprentice recruitment service, vacancy advertising and employer support to help you find and develop suitable candidates.

Employing a qualifying apprentice under 25 can create a real, ongoing National Insurance saving for your business. When that is combined with eligible apprenticeship funding and potential employer incentive payments, the total cost of recruitment and development may be more manageable than many employers expect.

If you are planning to recruit, it is worth checking whether the role could be filled by an apprentice and whether there is a suitable standard for your business.

CMS Vocational Training can help you identify the right apprenticeship, advertise your vacancy and understand the funding and employer support potentially available. Call 01924 470 477 or email info@cmsvoc.co.uk.