UK: employer NI relief for under-21s is about £0.5-0.8bn below HMRC, beyond missing apprentice flags
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Assessment
- Difficulty
- 4/5
- Estimated time
- 3-5 days
- Newbie friendliness
- 45/100
Research direction
Start by tracing how the national release builds weighted employee records and applies calibration, take-up, and multiple-jobs handling for employees aged 16–20. Compare age-specific employee counts, employment income distributions, and earnings above the £5,000 secondary threshold with the cited HMRC RTI and ONS LFS/ASHE statistics. The issue is addressed when the under-21 relief discrepancy is explained with aggregate evidence and any contributing data or calibration behavior is identified.
Written by the indexing model from the issue text.
Description
Summary
On the current national release (microcosm-uk-2024-25-national-20261023T075039Z-a133f37a, policyengine-uk 2.147.2), the employer NI zero rate for employees under 21 costs about £1.42bn in 2025-26 (policyengine-uk#2505). HMRC's tax relief statistics (January 2026, Table 2) put the under-21 relief at £1.90bn and the apprentice relief, which already includes apprentices under 21, at £0.57bn.
Missing apprentice flags (#1372, draft fix #1373) can explain at most a few hundred million of the gap, because only apprentices aged 21 to 24 are missing. The rest, roughly £0.5-0.8bn, points at under-21 employees themselves: too few of them on the spine, too little earnings above the secondary threshold, or calibration absorbing them.
Suggested checks
- Weighted count of employees aged 16-20 by age, and their mean and distribution of employment income, against HMRC RTI payroll statistics and ONS LFS/ASHE for 2025-26.
- Share of under-21 employees with earnings above the secondary threshold (£5,000 from April 2025), since the relief is the employer NI they would otherwise pay.
- Whether any calibration target binds or pulls on this group, and whether the take-up or multiple-jobs handling drops some of them.
Aggregates only. Related: #1372, #1373, policyengine-uk#2505.
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