Salon owners may be exempt from paying NI contributions for apprentices

Salons are being reminded that, from April, they may no longer need to pay National Insurance contributions for employing an apprentice, as long as the trainee is following an approved apprenticeship training and assessment framework.

From April 6, any business employing an apprentice may not need to pay employer Class 1 National Insurance contributions (NICs) on earnings below £827 a week, or the equivalent of £43,000 a year, said the Government. To qualify for this exemption, the apprentice must be under the age of 25, and following an approved government apprenticeship framework.

There are different frameworks for England, Wales, Scotland and Northern Ireland, but trade association National Hairdressers' Federation, which also includes beauty salon owners, has pointed out that if members are using its standard apprenticeship agreements they will automatically be following one of these frameworks anyway.

With salons under financial pressure from the arrival of the new £7.20-an-hour National Living Wage for over-25s from April, the cost of providing pensions (often for the first time) under pensions auto-enrolment, and the fact the apprentice minimum wage went up by 21% last October, this change was good news, said NHF president Paul Curry.

“Anything that helps to offset the additional costs many salons are facing over the next few months is welcome,” he said. “Salons need to make sure they’re benefiting from this change by informing HM Revenue & Customs they have an apprentice who fits this category and therefore their NI should be adjusted accordingly,’ he added.

Curry also urged salons not to overlook the fact the government’s Employment Allowance, which allows businesses to cut their employer NICs, will increase from £2,000 a year to £3,000 a year from April. Any business whose NI bill is therefore lower than this will not have to pay any employer NICs at all.