Employer NI for Under 21s (2026/27): 0% to £50,270
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Estimate only. Independent tool, not affiliated with HMRC. Rates checked 20 October 2026. Real payroll rounds each pay period.
Employers pay no National Insurance on pay up to £50,270 a year for employees under 21 in 2026/27. Above that figure, the 15% rate applies to the extra. The relief uses NI category M, and it saves up to £6,790.50 a year for each qualifying employee. Try the calculator above with category M, then read the rules and the planning tips.
In this guide18 sections
How the relief works
For an under-21, the Upper Secondary Threshold of £50,270 replaces the £5,000 Secondary Threshold. You pay 0% on everything below it. The rate returns to 15% on pay above it.
Employer NI for under-21 = (pay − £50,270) × 15%, but never below zero
Employee NI is not affected. Under-21s still pay 8% on earnings above £12,570.
Examples
| Pay | Standard employee | Under-21 (category M) | Saving |
|---|---|---|---|
| £18,000 | £1,950 | £0 | £1,950 |
| £28,000 | £3,450 | £0 | £3,450 |
| £40,000 | £5,250 | £0 | £5,250 |
| £60,000 | £8,250 | £1,459.50 | £6,790.50 |
Which employees qualify
Any employee who is under 21 at the time of payment. There is no need for a special contract. Full-time, part-time and casual staff all count. There is no limit to the number of employees you can have under this relief.
When the relief ends
The 0% rate applies up to the employee’s 21st birthday. After that, they move to category A. For example, if someone turns 21 on 12 June, payroll changes their letter in the pay period that follows. A monthly payroll running to the end of June would still treat June pay as under-21 pay. Check the HMRC guidance and what your payroll software does at the birthday.
The cost of turning 21
The cost of an employee jumps when they turn 21. A staff member on £28,000 costs £3,450 more per year in NI. Some employers plan pay reviews around this date. Others keep apprentices on an approved scheme beyond 21 to stay on category H until 25. See employer NI for apprentices.
| Salary at 21 | Extra employer NI per year | Extra per month |
|---|---|---|
| £20,000 | £2,250 | £187.50 |
| £25,000 | £3,000 | £250 |
| £30,000 | £3,750 | £312.50 |
| £40,000 | £5,250 | £437.50 |
Planning pay for the 21st birthday
Some employers raise pay at 21, others hold it for a year. If you raise pay from £24,000 to £26,000 at 21, the NI on the new salary is £3,150. The employee’s raise of £2,000 then costs you £5,150 in the first year. Work this out before you promise a pay rise. Use the calculator to test options, and the cost of employing someone page to check the full cost.
What to keep on file
- The employee’s date of birth
- Their start date
- A record of when you changed their category
HMRC can ask for these in a check.
Under 21 and Employment Allowance
Employment Allowance still works. If most of your staff are under 21, your NI bill is small, and the allowance may not be fully used. In that case you may leave some unused. It does not carry forward.
Case study: a young team
A start-up employs six people.
| Employee | Age | Pay | Employer NI |
|---|---|---|---|
| Developer | 20 | £45,000 | £0 |
| Designer | 19 | £32,000 | £0 |
| Marketer | 20 | £28,000 | £0 |
| Support | 18 | £22,000 | £0 |
| Manager | 34 | £55,000 | £7,500 |
| Founder employee | 29 | £40,000 | £5,250 |
| Total | £12,750 |
Employment Allowance covers £10,500, so the start-up pays £2,250. Without the relief for under-21s, the bill would be £28,800 before the allowance.
When someone earns above £50,270
For a 20-year-old on £60,000, the employer pays 15% on £9,730, which is £1,459.50. The relief still saves £6,790.50.
Hiring plans
If you are deciding between a 20-year-old and a 22-year-old at the same pay, the younger hire costs less in NI for as long as they stay under 21. Never choose a worker on age alone, because age discrimination rules apply. The relief is a saving, not a reason to prefer one candidate.
Mistakes to avoid
- Forgetting to move the employee to category A on their birthday.
- Using M for an employee who is 21 or over.
- Assuming the employee’s own NI is also lower. It is not.
- Not keeping a record of the date of birth.
Hiring at 19: a three-year view
Suppose you hire someone at 19 on £24,000 and give small rises. Their category changes on their 21st birthday.
| Year | Age | Pay | Category | Employer NI |
|---|---|---|---|---|
| 1 | 19 | £24,000 | M | £0 |
| 2 | 20 | £25,000 | M | £0 |
| 3 | 21 | £26,000 | A | £3,150 |
The step at 21 is the number to plan for. A rise at the same time adds to it. See apprentice relief if the role could be set up as an approved apprenticeship, which can keep the 0% rate to 25.
Comparing a 20-year-old and a 22-year-old
| 20-year-old on £28,000 | 22-year-old on £28,000 | |
|---|---|---|
| Category | M | A |
| Employer NI per year | £0 | £3,450 |
| Cost per month | £0 | £287.50 |
Hire on skills and fit, not age. Age-based hiring decisions can breach equality law. The relief is a lower cost for staff who happen to qualify, and a reason to check letters carefully, not a reason to choose by age.
Records to keep
Date of birth, a copy of ID checked at hire and the date you changed the category. If HMRC checks, these three items answer most questions.
Frequently asked questions
What is the employer NI rate for under-21s?
0% on pay up to £50,270 a year. Above that, 15%.
What category letter do I use?
M. If the employee has an NI deferment, use Z.
Do I need to apply to HMRC?
No. You set the category letter in your payroll software.
Does it apply to part-time staff?
Yes. It applies to all employees under 21, whatever their hours.
When do I switch to category A?
From the pay period after the employee’s 21st birthday. Check HMRC’s guidance for the exact pay date.
Does the relief cover the apprenticeship levy?
No. The levy is separate and based on the pay bill.
Does the relief apply to temporary staff?
Yes. Any employee under 21 qualifies for the 0% rate, whatever their contract.
Do I need the employee’s date of birth in writing?
Keep a record, such as a copy of ID checked at hire.
Is category M the same as the Freeport relief?
No. They are separate reliefs with different limits.
Does it apply to directors under 21?
Yes. Directors use the annual method, but the same 0% rate to £50,270 applies.
Related guides
- Employer NI Exemptions and Reliefs 2026/27
- NI Category Letters for Employers (2026/27)
- Employer NI for Apprentices (2026/27): Category H
- Cost of Employing Someone UK 2026/27: Calculator
- Employer NI by Salary 2026/27: Table and Calculator
Official sources
- National Insurance rates and categories
- HMRC: Rates and thresholds for employers 2026 to 2027
This page is independent information, not tax advice, and has no link with HMRC. Figures were checked on 20 October 2026 for the 2026/27 tax year. Always confirm the final figures with HMRC or your payroll provider.
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