Employer NICs Relief for Veterans

From 6 April 2021, when a veteran enters into their first civilian employment after leaving HM Armed Forces, their employer will be able to claim relief for secondary National Insurance Contributions (NICs).

Qualifying criteria:

  • The relief is available for the first 12 consecutive months of civilian employment only.
  • There is no time limit on when the veteran left the armed forces.
  • Qualifying veterans need to have had at least one day in the regular armed forces, which can include at least one day of basic training.
  • Qualifying employment cannot be within HM Armed Forces or with organisations with strong links to HM Armed Forces. These include, for example, the Ministry of Defence, NATO and reserve organisations.
  • Self-employment does not qualify for being in qualifying employment or starting the 12 month qualifying period, due to the lack of Class 1 NICs payable.

How it works:

  • The relief will take effect from 6 April 2021.
  • The qualifying period starts with the first day of the veteran’s first civilian employment. This is fixed by the employment contract.
  • The qualifying period can start before this time, but only the element of the first 12 months falling after 5 April 2021 will qualify for the relief.
  • The first employment can end within the first 12 months and subsequent qualifying employments taken up within that timeframe will also qualify, until the 12 months comes to an end.
  • Concurrent employments in the 12 month qualifying period will also qualify.
  • The relief provides for zero-rated secondary NICs up to the Upper Secondary Threshold. This will work in a similar way to the current reliefs available for the under 21s and under 25 apprentices.
  • For qualifying employments taking place from April 2021 until March 2022, the employer must pay all secondary NICs as usual. A claim can then be submitted for repayment in April 2022. Details of how this will work are to be announced later in the year.
  • For employments qualifying for relief from April 2022, employers will be able to claim the relief in real-time through the PAYE system.

Record keeping

  • It is the employer’s responsibility for checking that the employment qualifies for relief, including:
    • Whether the veteran qualifies.
    • When the 12 months started.
    • Records must be kept for a minimum of three years.
  • An employer may ask for the following in order to confirm qualification:
    • The veteran’s armed forces ID card.
    • Letter of employment/contract or P45 from HM Armed Forces.
    • The veteran’s discharge papers.
    • Previous employment contracts (to establish start date).
Published
29th June 2021