The government is consulting on plans for a National Insurance contributions (NICs) holiday for Armed Forces veterans who take up civilian jobs, first announced at Spring Budget 2020
The proposal involves scrapping employer NICs for a full year for every new employee who has left the Armed Forces. It is intended to incentivise employers to take veterans on, boost veterans’ pay and opportunities, and help ensure companies benefit from the skills of service leavers.
The consultation seeks views on a range of issues and on the government’s preferred approach to the design and implementation of this policy.
The measure will introduce a secondary class 1 employer NICs relief on the wages of veterans for the first 12 months of their civilian employment and will be available to employers from April 2021.
To claim back the employer NICs paid on the salaries of eligible veterans employed between April 2021 and March 2022, employers will be able to make a claim to HMRC from April 2022. From this point onwards, employers will be able to claim the relief in real time through PAYE.
The consultation looks at how the government intends to define ‘veterans’ for this relief, the employment periods that should qualify, and how it should be administered.
This includes which organisations within the Armed Forces should be included in the definition of eligibility, the length of time a veteran must have served, and how recently the veteran should have left these organisations.
It also considers the situation regarding those who have been able to find any work immediately after leaving the Forces, or who left just before the start of the tax year.
The government’s preferred approach is to offer this relief on a veteran’s earnings under the NICs upper secondary threshold, currently £50,000. This would apply to any civilian employment that occurs during a 12-month period beginning on the first day of the veteran’s first civilian job after leaving the Armed Forces.
HMRC says this approach ensures that the relief is targeted at veterans most in need of support, keeps the claims process simple, and does not unfairly exclude any veteran.
The consultation closes on 5 October.