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New NIC Relief Scheme for Employers

Employers taking on new staff who have served at least one day in the regular armed forces – even if that is just one day of basic training, will be able to take advantage of a new National Insurance (NI) relief scheme for the first 12 months of employment.

With effect from 6th April 2021, this new NI relief is available regardless of when the veteran left the armed forces, providing they have not been previously employed in a civilian role. This is part of the Government’s Armed forces Covenant to support those returning to civilian life and to encourage businesses to consider taking on veterans. See https://www.gov.uk/government/collections/armed-forces-covenant-supporting-information#covenant-for-businesses

Relief is available for any civilian employment, including roles with organisations that may have strong links to the armed forces, such as the Ministry of Defence or NATO. Employment with a reserve organisation would however not qualify. It applies on earnings up to the upper secondary NIC threshold. If a veteran earns above this, employers can apply the relief on the part of the earnings below the threshold. This approach is in line with existing relief schemes for under-21s and apprentices under 25.

The way employers will be able to claim this relief will change over the next couple of years. Initially they will be able to claim the relief for the 2021/22 tax year from April 2022. From 2022/23, relief can be applied in real time through PAYE. The government has said it intends to review whether or not to extend this policy on employer NICs for forces veterans beyond April 2024. For more information on the practicalities of this, please speak to your accountant.
Posted on 23 Apr 2021
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