How are apprentices taxed?
As an apprentice, whether traditional or modern, you train to do your job with a mixture of working and some combination of 'on-the-job' training and more formal learning. The end result will be a formal recognition of your ability. You are employed under a special contract for apprentices that is mainly a contract for training, but you are treated for tax purposes in the same way as any other employee.
You pay your tax under the ‘Pay as You Earn’ (PAYE) system. Your employer takes your tax from your wages before you are paid – and then pays that tax over to HMRC for you. You can read more about how much tax you may have to pay in our ‘Working’ section.
Your hourly rate of pay is determined in part by your contract and in part by regulations relating to the National Minimum Wage.
What about National Insurance? Aren’t there some special rules?
For the 2018/19 tax year, if you earn more than £162 per week you will also have to pay National Insurance contributions (NIC). As an employee you will pay Class 1 NICs. These are charged at 12 per cent of your income between £162 and £892 per week. Earnings over £892 will attract additional NICs at 2 per cent.
With regards to special rules about National Insurance for apprentices, you may have heard that the Government cut NIC for apprentices under 25, from 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.
In other pages on this website we cover:
- How is my tax collected?
- Factsheet on What should I see on my payslip?
- What is the National Minimum Wage for apprentices?
- Introduction to tax credits and state benefits
- Can I claim tax credits if I am an apprentice?
- Factsheet for Apprentices which contains further information on the National Minimum Wage, how you are taxed, National Insurance contributions and tax credits
- Factsheet on Pension Automatic Enrolment