National Insurance relief for employing veterans
The Government has announced that from 6 April 2021, there will be an employer National Insurance Contribution (“NIC”) relief for businesses who employ veterans.
Veterans
Under the scheme, a qualifying veteran is classed as anyone who has served a minimum of at least 1 day in the regular armed forces, which includes those who have completed at least 1 day of basic training.
For the purposes of claiming the relief, it does not matter when the veteran left the armed forces, however they cannot have had another civilian employment since leaving the forces.
Who can claim the relief?
Employers will only be able to claim the employer NIC relief for qualifying veterans. As those who are self-employed do not pay Class 1 NIC, they do not qualify for the scheme and therefore cannot claim the relief.
The relief can be claimed for veterans even if their employment started before the 6 April 2021, however the relief will only be available from that point onwards.
Qualifying employment
The relief is only available for the 12 consecutive months from the veteran’s first day of civilian employment, and other than self-employment, is available for any civilian employment.
The employment therefore cannot be part of the armed forces or be with an organisation that has a strong link to the armed forces, such as NATO or the MOD.
How to claim the relief
The relief can only be applied to the upper secondary threshold of NIC.
From 6 April 2021 to March 2022, employers will need to continue to pay the Class 1 NIC as usual however this can be claimed back from HMRC from March 2022 and will be back paid.
It does become easier for employers, as from March 2022 they will be able to apply the relief in real time and will therefore not need to worry about claiming the relief back.
It is vital that employers firstly check that the veteran is eligible for the relief before making a claim. In order to assist, they can request any of the following documents:
– veteran’s ID card – letter of employment or contract with HM Armed Forces – veteran’s P45 from leaving HM Armed Forces – discharge papers from HM Armed Forces – the employment contract of a veteran’s previous employment
Are there any restrictions?
If the veteran’s salary is above the NIC threshold, then the relief can only be claimed on the amount below the threshold. NIC will need to be paid on any higher amount.
The 12-month relief period does not come to an end even if the employment of the veteran does. This means that were a veteran to find another job during this period, their new employer can claim the relief also.
Employers must ensure that they keep all records relating to the veteran’s eligibility and claim for at least 3 years after the end of the tax year to which they relate.
Read the full Government update here.
If you would like further advice on the NIC relief, then please call the team on 01752 663295.