National Insurance Contributions Act 2015, No. 5 (as amended)

The National Insurance Contributions Act 2015 is a legislative measure in the UK aimed at modifying the rules and regulations surrounding National Insurance Contributions (NICs). This Act introduces specific provisions to support employment and reduce the financial burden on businesses, particularly focusing on supporting young workers and apprentices.

Purpose: The primary purpose of the National Insurance Contributions Act 2015 is to encourage employment, particularly among young people and apprentices, by reducing the NICs liabilities for employers. This measure aims to make it more financially viable for businesses to hire and retain young employees.

Requirements:

1. Abolition of Employer NICs for Under-21s: The Act abolishes employer National Insurance Contributions for employees under the age of 21, provided their earnings do not exceed the Upper Secondary Threshold. This reduction applies to earnings up to this threshold, incentivizing businesses to hire young workers.
2. Abolition of Employer NICs for Apprentices Under 25: Similar to the provision for under-21s, the Act abolishes employer NICs for apprentices under the age of 25, again up to the Upper Secondary Threshold. This measure is designed to encourage the hiring and training of apprentices by reducing the associated employment costs.
3. Anti-Avoidance Measures: The Act includes provisions to prevent the exploitation of these NICs reductions. It ensures that the benefits of these measures are not used inappropriately or manipulated to avoid paying fair NICs in other circumstances.

Applicability: The National Insurance Contributions Act 2015 applies to all employers in the UK who employ workers under the age of 21 or apprentices under the age of 25. This includes businesses across all sectors, providing them with financial incentives to support the employment and training of young people.

By reducing the NICs burden on employers for these specific groups, the Act aims to promote youth employment and apprenticeship schemes, fostering a more skilled and engaged workforce while supporting the broader economic objective of reducing youth unemployment.

The National Insurance Contributions Act 2015 includes specific provisions that necessitate certain evidence requirements to ensure compliance with the rules and to facilitate the appropriate application of National Insurance Contributions (NICs) reductions for employers. These evidence requirements are crucial for both verification and regulatory purposes.

Key Evidence Requirements:

1. Employee Age Verification: Employers must maintain accurate records verifying the ages of employees who are under 21 and apprentices who are under 25. This documentation is essential to ensure that the NICs reductions are correctly applied to eligible workers. Acceptable forms of verification can include birth certificates, passports, or other official identification.
2. Apprenticeship Verification: For apprentices under 25, employers must provide evidence of the apprenticeship status. This includes maintaining records of the apprenticeship agreements, detailing the start and end dates of the apprenticeship, the training provider, and the nature of the apprenticeship. This helps to confirm that the employees qualify for the NICs exemption.
3. Earnings Records: Employers need to keep detailed payroll records that clearly show the earnings of employees who qualify for NICs reductions. These records should include regular wages, bonuses, and other forms of compensation, ensuring that the earnings do not exceed the Upper Secondary Threshold for NICs purposes.
4. NICs Calculations: Employers must accurately calculate and document the NICs payable for all employees, including those eligible for the NICs reductions. This includes maintaining detailed records of how NICs have been calculated and applied, ensuring transparency and compliance with the regulations.
5. Compliance with Anti-Avoidance Measures: Employers must also demonstrate compliance with the anti-avoidance provisions of the Act. This includes maintaining records that show the legitimate use of NICs reductions and ensuring that these reductions are not exploited for tax avoidance purposes.
6. Reporting Requirements: Employers are required to report relevant information to HM Revenue and Customs (HMRC) as part of their regular payroll submissions. This includes details of all employees, their earnings, and the NICs contributions made, ensuring that HMRC has the necessary information to monitor and enforce compliance.

These evidence requirements ensure that the reductions in NICs for employing young workers and apprentices are applied correctly and fairly, supporting the intended purpose of the National Insurance Contributions Act 2015 to promote youth employment and apprenticeships.