Woman dressed in military fatigues on left, same woman in nurse uniform on right
Veterans NIC relief – don’t miss out

At the Autumn Statement this year it was confirmed that an NIC relief for employers who hire veterans will be extended for one year. 

This relief, which will now be available until April 2025, may allow businesses to pay no employer NICs in the first year of employing a qualifying veteran. However, despite being available since April 2021, take up of the relief has been relatively low. So what does it cover, and who might benefit?

Who qualifies?

The relief is available to any business employing a veteran who:

  • has served at least one day in the regular armed forces (or completed at least one day of basic training); and
  • is making their first move into civilian employment.

It doesn’t matter when the veteran left the armed services. However, the relief only applies for 12 months from the date the veteran first moves into a civilian role. If during this 12 month period the veteran changes job, their new employer can continue to claim relief, but only up to the end of the original 12 month period.

For example, if a qualifying veteran left the army in January 2022 and started a civilian role on 6 December 2023, the NIC relief will be available until 5 December 2024. If the veteran changes employer on 1 June 2024, the new employer will be entitled to claim the relief, but only until 5 December 2024.

If a veteran has more than one job at the same time within the 12 month qualifying period, each employer can also claim the relief.

How does it work?

The relief takes the form of a zero rate for employer NICs, but only on earnings below the Veteran’s Upper Secondary Threshold (currently £50,270 a year). If the veteran’s earnings are below this level, then no employer NICs will be payable. If they are above £50,270, the relief only applies to earnings which fall below that threshold.   

To claim the relief, National Insurance category V should be used when submitting payroll reports. The only exception to this is if the veteran has an NI category letter other than A (for example because they are under 21 or an apprentice aged under 25) in which case you will need to write to HMRC to claim the relief at the end of the tax year.

What should employers do now?

To ensure they don’t miss out on what could be a valuable relief, employers should routinely check whether new employees are veterans. Even if this is not their first civilian role, they may still be able to claim relief provided it is less than 12 months since the veteran started that first role.

Employers who do claim relief need to make sure they keep adequate records to support it, including evidence to show:

  • that the employee is a qualifying veteran (such as Army discharge papers or a P45); and
  • the start date of their first civilian employment (such as a copy of their previous employment contract).

HMRC has published more information on the relief which employers may find helpful.

 

This article reflects the position at the date of publication (19 December 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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