Did you know that any UK business who recruits a former member of the UK armed forces in their first year of civilian employment can potentially save thousands of pounds through National Insurance relief?
The relief is available for 12 consecutive months from the veteran’s first day of civilian employment and has been available since April 2021. Up until March 2022, employers had to pay the associated secondary Class 1 National Insurance contributions as normal and then claim the relief back retrospectively. However, since April 2022, employers are now able to apply the relief in real time through PAYE.
Do all veterans qualify?
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 any civilian capacity elsewhere.
Does it cover all employments?
The relief is available for any civilian employment. A civilian employment is one that is not part of the armed forces. Employment with a reserve organisation is not considered as civilian for the purpose of this relief. Self-employed individuals do not pay Class 1 National Insurance contributions, therefore, self-employed businesses do not qualify for this relief.
Are there any limits?
The relief will apply on earnings up to the upper secondary threshold. If the veteran’s earnings are above the threshold, employers can apply the relief on the earnings below the threshold.
The first day of employment will be the start date taken from the employment contract between the employer and employee and the 12 month period does not change if the employment finishes. This means that 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.
Other considerations
Should you go ahead with claiming relief for a qualifying veteran, it is important to remember that you are responsible for checking and maintaining records that demonstrate the individual is a qualifying veteran and the start date of the veteran’s first civilian employment. You can request any of the following documents during onboarding, to confirm the veteran qualifies:
– Veteran’s identification card (which shows their time in the armed forces)
– 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 an individual’s previous employment (to determine start date)
Employers will also need to keep records to demonstrate the employee’s eligibility for the relief for at least three years after the end of the tax year to which they relate.
Get in touch
If you think you could potentially make a claim for relief from employing a qualifying veteran, or would like to discuss if this is something you could look to do in the future, our payroll team would be happy to talk through your individual circumstances. Get in touch via payroll@pmm.co.uk or call 01254 679131.
A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.
