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Guidance for employers on NIC holiday for veterans

12 February: HMRC has outlined how organisations employing former UK military personnel can claim relief on secondary national insurance contributions from April. A new policy paper lists documents that can help to ensure a veteran qualifies and examples of how claims work.

As part of government action to boost employment of those leaving the armed forces, from April 2021 employers will be able to claim relief on secondary national insurance contributions (NIC) for the first 12 months of a veteran’s civilian employment.

The relief, which was announced in the Budget 2020, is available for any former member of the regular armed service (Army, Royal Navy or Royal Air Force) who have completed one day of employment. The guidance confirms that this includes those who completed one day of basic training.

The 12-month relief period starts on the veteran’s first day of civilian employment, and subsequent employers will have to confirm this date to make their claim. The onus is on the employer to check whether an employee qualifies for the relief and to keep records proving this and the date of their first civilian employment.

The guidance confirms that the relief only applies to earnings up to the secondary threshold and for earnings over this threshold NICs will have to be paid as normal. Employers should also note that the relief is not an exemption of secondary NIC but a zero rating, which means it is included in calculations for the apprenticeship levy.

The IT systems to process the relief through PAYE are not yet live and so organisations wanting to claim the relief between 6 April 2021 and 5 April 2022 will have to pay the secondary NIC and then manually claim to recover the payments from HMRC. From 6 April 2022 the relief should operate automatically via payroll software.

From the draft legislation and guidance the Tax Faculty understands that the relief should be available where a veteran has concurrent employments, ie more than one job at any one time, as well as for consecutive jobs within the 12 month timeframe.