HMRC have provided guidance on this new incentive designed to encourage employers to take on military veterans. This relief is only available for 12 consecutive months from the veteran’s first day of civilian employment. This zero-rate can be applied up to the upper secondary threshold (£967 per week). This relief is available from 6 April 2021. For the 2021/22 tax year employers will need to pay the associated secondary Class 1 National Insurance contributions as normal and then claim it back retrospectively from April 2022 onwards. From April 2022 onwards, employers will be able to apply the relief in real time through PAYE.
Employers will only be able to claim National Insurance contributions relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces. This includes anyone who has completed at least one day of basic training.
The relief is available to all employers of veterans regardless of when the veteran left the regular armed forces, providing they have not previously been employed in a civilian capacity.
Employments that qualify
Relief is available for any civilian employment. A civilian employment is one that is not part of the armed forces and includes employments with organisations that may have strong links to HM Armed Forces, such as the Ministry of Defence or NATO. Employment with a reserve organisation is not considered as civilian for the purpose of this relief and does not trigger the qualifying period (outlined below).
Employers can claim relief even if the employment starts before 6 April 2021 but will only be able to claim for the remaining 12 month qualifying period. The first day of employment will be the start date taken from the employment contract between the employer and the employee.
This 12 month period does not change if the employment finishes. This means that current and future employers can also claim this relief if they employ a veteran within their qualifying period. Subsequent employers must determine the first day of the veteran’s first civilian employment and confirm that the veteran is employed with their business during the qualifying period.