Class 1 NICs Exemption for Certain Apprentices and Students Coming to the UK – Repeal of ReliefSunday, December 11th, 2011
Regulation 145(3) of the Social Security (Contributions) Regulations 2001 provides an exemption from Class 1 NICs for the first 52 weeks of employment for an employee who is not ordinarily resident in the UK in the following circumstances:
- Student Exemption – where the UK employment occurs during a vacation from a course of full time studies outside the UK and the temporary employment is similar to, or related to, their studies; or
- Apprentice Exemption – the UK employment is related to an apprenticeship which the individual is serving under a person outside the UK and it began before he was 25
This does not apply to workers from an EEA country.
The relief dates to a time when theUKbenefited from work provided by these two groups and at a time of labour shortage. Given that current immigration rules favourUKand EEA citizens only, Government felt that the exemption had limited use. As such, the relief is to be repealed effective payments made on or after 06 April 2012. HMRC’s Impact Note states that the little used exemption will mean that increased NICs will be payable but compliance and complexity issues are removed whilst decreasing administration burdens for the employer. However, note that the payment of NICs will give rise to an entitlement to contributory benefits and statutory payments, if earnings are high enough.
This will be repealed via Social Security Regulations; therefore, no draft legislation has been included in the Finance Bill 2012.
- HMRC – Repeal of Relief TIIN