National Insurance contributions relief for employers who hire armed forces veterans

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In the spring budget of 2020, the Chancellor announced the introduction of a National Insurance holiday for employers that hire former members of the UK regular armed forces. The holiday will exempt employers from any National Insurance contributions liability on a veteran’s salary up to the Upper Secondary Threshold (UST) in their first year of civilian employment (the employee will still be liable for National Insurance contributions)

This relief will be available from April 2021. Employers will be able to claim this relief for 12 months starting from the first day of the veterans first civilian employment after leaving Her Majesty’s armed forces. Subsequent employers will be able to claim this relief during this 12 month period.

From April 2021 to March 2022, employers will still need to pay the associated secondary Class 1 National Insurance contributions as normal and then claim it back retrospectively following the end of the 2021-22 tax year. From April 2022 onwards, HMRC intend that the secondary (employers) NIC relief is claimed directly via payroll.

More information can be found at gov.uk/government/publications/national-insurance-contributions-relief-for-employers-who-hire-veterans

How will Payroll Manager handle the NIC holiday for veterans?

If you have taken on a qualifying veteran (as per the rules specified in gov.uk/government/publications/national-insurance-contributions-relief-for-employers-who-hire-veterans ) then click ‘Employees‘ then ‘Employee Details‘ from the main menu in Payroll Manager, and select the ‘Work‘ tab.

Enter the first day of the veteran’s first civilian employment in the box provided. If this is the veteran’s first job since leaving the armed forces then this date will be the same as their start date of employment with this employer. If the veteran has been employed elsewhere since leaving the armed forces, then you would need to establish their first day of civilian employment with their first employer, and enter that date.

For tax year 2021-22: Entering a date in this box will have no effect on the calculation of employer NIC in the tax year 2021-22, as HMRC rules state that employer NIC is to be paid as normal durng this year, then claimed back retrospectively following the end of the tax year. Moneysoft intend to produce a report to help with this once the full guidance has been provided by HMRC – i.e towards the end of the 2021-22 tax year.

For tax year 2022-23: Payroll Manager will automatically calculate the correct amount of employer NIC due (if any) for veterans in employment.

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