 than £183 per week you will also have to pay National Insurance contributions (NIC). As an employee you will pay Class 1 NIC. These are charged at 12 per cent of your income between £183 and £962 per week. Earnings over £962 per week will attract additional NIC at 2 per cent.
If you have earnings above the lower earnings limit (£120 per week or £520 per month for 2020/21/20) and below the primary threshold (£183 per week or £792 per month for 2020/21) you will not have to pay any Class 1 NIC. Your NIC record will be credited, however, as though you have paid Class 1 NIC. These are called NIC credits. These may earn you entitlement to contributory benefits and the state pension.
You can find out more about this in the NIC guidance in our employment section.
With regards to special rules about National Insurance for apprentices, you may have heard that the government cut NIC for apprentices aged under 25, since April 2016. This is true, however this will only apply to employer NIC for apprentices aged under 25 and up to earnings of a certain level. This will make it cheaper for employers to take on an apprentice – hopefully meaning they will take on more. You can read more about it in this government notice.
Can apprentices claim tax credits or universal credit?
There are two types of tax credit – working tax credit (WTC) and child tax credit (CTC).
The tax credits system is gradually being replaced by universal credit (UC). UC should have finished rolling out for new claims by January 2019. Existing tax credit claimants will be transferred across to UC sometime between July 2019 and March 2023 unless they have a change of circumstances that means they need to claim UC earlier or they choose to claim UC.
Apprenticeships and tax credits can be a tricky subject. As a general overview, if you are single and have no children, then to be entitled to WTC, you will need to be:
- at least 25 years old and in ‘remunerative’ work for at least 30 hours per week; or
- at least 16 years old and working at least 16 hours per week, if you have a physical or mental disability which puts you at a disadvantage in getting a job; or
- at least 60 years old and working for not less than 16 hours per week.
The hours requirements are different if you have children or a part of a couple. For a full list of the requirements go to Do I qualify for working tax credits (WTC)?.
HMRC say that the hours you work as an apprentice will count as ‘remunerative’ work for WTC purposes if:
- you have a contract of employment for your apprenticeship.
- you are attending a scheme (apprenticeship) where your payment is classed as earnings and subject to income tax and NIC.
We advise that you contact the Tax Credits helpline and explain your situation.
You can find more on Tax Credits and Apprenticeships in the tax credits and benefits section.
In terms of universal credit and apprenticeships, you can claim universal credit while you are on a ‘recognised’ apprenticeship. DWP’s guidance says that this means you must:
- have a named training provider
- be working towards a recognised qualification
- be paid at least the NMW for an apprentice
You must also be able to provide:
- the name of your training provider
- the name of the vocational qualification you are studying for.
There are no upper or lower limits to the number of hours that you must work to qualify for universal credit as an apprentice but you may be expected to carry out ‘work related activity’ as part of your Claimant Commitment if your earnings are not above a certain level, known as your Conditionality Earnings Threshold (CET). If you are an apprentice this will be no more than 30 hours a week multiplied by the applicable minimum wage rate. If you are disabled, then this could be less or you may not be subject to CET at all. This can be discussed with your work coach and will be agreed as part of your universal credit Claimant Commitment.
Rosie was born in November 1998 and began her two year apprenticeship on 1 September 2019. Rosie is paid per calendar month and her NMW will be as follows:
- 1 Se