Employer National Insurance on a temp under 21: the 0% rate up to £50,270, and what it does to a £13 an hour margin

A recruitment agency prices a temp's charge rate from the pay rate plus the costs the agency carries on top. Employer National Insurance is the largest of them after holiday pay, and it is not the same for every temp. For a temp under 21 who is paid through the agency's PAYE payroll, the 2026 to 2027 rate is 0% up to a high weekly figure.

What GOV.UK's rates page says

For 2026 to 2027, GOV.UK's employer rates give:

• Employer (secondary) Class 1 National Insurance of 15% above the secondary threshold of £96 a week (£417 a month, £5,000 a year).
• An upper secondary threshold of £967 a week (£4,189 a month, £50,270 a year) for employees under 21 and for apprentices under 25.
• A rate of 0% for those employees on earnings between the two thresholds. The 15% applies only above the upper figure.

The category letter for an under-21 employee is M on the page's table, and for an apprentice under 25 it is H.

Two temps, one job

Both work a 40-hour week at £13 an hour, so each is paid £13 × 40 = £520.

Temp aged 21 or over (category A):

1. Pay above the threshold: £520 − £96 = £424.
2. Employer National Insurance: £424 × 15% = £63.60 a week.
3. Per hour: £63.60 ÷ 40 = £1.59.
4. Over a 12-week assignment: £63.60 × 12 = £763.20.

Temp under 21 (category M):

1. £520 is below £967, so the 0% rate applies.
2. Employer National Insurance: £0.

The same job costs the agency £1.59 an hour more for the older temp. Across 20 under-21 temps on 12-week assignments the difference is 20 × £763.20 = £15,264.

What it means for the charge rate

The charge rate must still cover the temp's pay, holiday pay, employer National Insurance, pension and a margin. The temp margin calculator shows how each part is added. An agency that charges one flat rate for both temps keeps the difference as extra margin on the younger one. An agency that quotes each assignment from its costs can offer the client a lower rate for a temp under 21 and still earn the same.

Points to check on your payroll

• Category letters. The rate applies only if the temp is on the right letter. Check each new starter's date of birth against the letter set up in payroll software. The page's table shows M for under 21.
• The 21st birthday. The employer rate changes when the temp turns 21. I read the thresholds, not the rule for the exact pay period in which the letter changes, so confirm it with your payroll software or HMRC.
• Temps paid through an umbrella company. The thresholds above apply to the employer on the payroll. See who is liable in IR35 and umbrella arrangements.
• Minimum pay. A rate that clears the minimum for the temp's age does not change the thresholds. The April 2026 pay rise guide has the figures.

Overlyft builds AI staff who join a recruitment team and check each temp's date of birth and payroll category against the assignment rate, then give the payroll lead a list of any who turn 21 in the coming month so the charge rate is reviewed before it is invoiced.

This is general information, not tax or payroll advice. Check GOV.UK and the agency's own figures with a payroll adviser.