Zero rate NI for Veterans – draft legislation

At Spring Budget last year, the government announced its intention to introduce a National Insurance Contributions (NICs) holiday for employers who hire former members of the UK regular armed forces. 

The relief will exempt employers for any NICs liability on veteran’s salary up to the Upper Secondary Threshold in their first year of civilian employment. It will be available to employers from April this year and transitional arrangements will be in place for the 2021-2022 tax year, ahead of employers being able to claim the relief through PAYE in real time from April 2022.

Open consultation: Draft legislation: zero-rate secondary Class 1 contributions for veterans

A consultation of the draft clauses to enable employers to apply a zero-rate of secondary Class 1 Employer National Insurance contributions (NICs) on the earnings of veterans during the first year of their civilian employment has been opened. It is intended to provide employers with a relief worth up to £5,000 for each qualifying veteran hired.

Veterans will qualify if they have completed at least one day of basic training in Her Majesty’s regular armed forces.

Employers will be able to claim this relief for the 12-month period starting on the first day of the veteran’s first civilian employment since leaving the regular armed forces.

The zero-rate will apply up to the Upper Secondary Threshold. Details on how employers will claim this relief will be published shortly.

For the consultation on the draft legislation:

PAYadvice.UK 11/1/2021

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