HMRC publishes response in supporting veterans’ transition into civilian life through employment

The government announced at the Spring Budget 2020 that from 6 April 2021, employers who recruit veterans in their first year of civilian employment will be able to benefit from zero rate secondary National Insurance contributions.

A consultation period ran from 21 July 2020 to 5 October 2020 and the HMRC has published the government’s response to the consultation along with a summary of the responses to the questions that were posed.  The government has also published draft clauses which are now subject to a technical consultation until 8 March 2021.  In summary, the policy consists of:

  • With effect from 6 April 2021 employers will receive relief of up to £5000 per qualifying veteran that they employ for the 12 month period that follows the first day of the veteran’s initial civilian employment.
  • This relief is based on earnings between the secondary threshold and the upper earnings limit.
  • The relief will be available for veterans who are under the PAYE scheme including ‘deemed employees’ by off-payroll working legislation, employed directors of single director companies and those that use personal and managed service companies.
  • The qualifying conditions are:
    • The veteran must have completed a minimum of 1 day of basic training.
    • They are in the 12 month period since leaving the Regular Armed Forces.  This does not include leaving the Reservists.
  • The policy is currently scheduled to end on 5 April 2024 but will be reviewed nearer the time to decide if it will be extended.

The HMRC will be issuing a new National Insurance Category from April 2022 for Veteran National Insurance contributions. For tax year 2021/2022, the relief will need to be claimed back via Real Time Information in 2022/2023 tax year.  Details will be issued to software developers in due course.  The HMRC has committed in providing guidance of the record keeping requirements to employers before April 2021.

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