HMRC publishes response to consultation: Supporting veterans’ transition into civilian life through employment

11 January 2021

HMRC has published its response to the consultation that sought views on a National Insurance contributions (NICs) holiday for veterans, that was announced at Spring Budget 2020.

The consultation ran from 21 July 2020 to 5 October 2020, and 37 written responses were received. The document confirms the Government response and a summary of responses to the questions that were posed.

The next steps are also outlined, and the Government has published draft clauses alongside the consultation response, which are subject to technical consultation until 8 March 2021. The key points for payroll professionals to be aware of are that the relief will be available from 6 April 2021, and that the Government will legislate for this. As predicted and outlined in the original consultation, employers will only be able to claim the relief in real time through PAYE in the tax year following the year that the policy comes into effect (2022-23). Therefore, for the first tax year (2021-22), employers will be required to pay the secondary NICs on the earnings of eligible veterans and then claim the associated relief back, from April 2022 onwards.

It is intended that the new policy will provide employers with a relief of up to a maximum of £5,000 for each qualifying veteran that is hired. A veteran will qualify in scenarios where they have completed a minimum of one day of basic training in Her Majesty’s regular armed forces. Employers will be entitled to claim this relief for the 12-month period that follows the first day of the veteran’s initial civilian employment since leaving the regular armed forces. Any subsequent and concurring employers will also be able to claim the relief during this period. The zero-rate is applicable up to the Upper Secondary Threshold (UST).

Further information on the record keeping requirements for employers will be published prior to April 2021. The Government intends to review the effectiveness of the relief, and this will establish whether or not it extends beyond April 2024 – the review will assess whether the policy has served its purpose and supported those who served in the Army to transition to civilian life.

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