HM Revenue & Customs Software Developers Support Team (SDST) has issued briefing notes for developers in relation to changes for National Insurance Contributions Holiday for Employers of Veterans abbreviated as NHEV.
The relief applies from April 2021, however HMRC were unable to ready their systems in time for real time operations and employers will be expected to pay NICs as normal and undertake a reclaim process for the 2021/2022 tax year.
For the 2022/2023 tax year a new NIC category letter ‘V’ is introduced.
Initial analysis of the requirements indicates that payroll software is likely to require the following:
1 – The acceptance of the new NIC category letter V
2 – Application of a new Veteran’s Upper Secondary Threshold (VUST)
3 – The date of commencement of first employment as a veteran
4 – An understanding of the one year anniversary date when the concession ends and the employee will need to be transferred to the standard NIC letter for their age and circumstance such as NIC Letter A and the NIC holiday ends, employer contributions then commence.
With implementation of the technical solution delayed by one year, it is better late than never (Maybe). There remain confusions on what methods of reclaim are to be operated for the 2021/2022 tax year to reclaim the resulting overpayment of employers National Insurance Contributions.
It is good that the HMRC SDST has obtained information from the relevant HMRC policy areas to provide some detail to software developers and employers on the business process requirements. Although there are many unanswered questions, at least planning for the change can now commence.
There are still gaps in the design which look to not be being resolved.
The resulting changes to electronic exchange requirements of the Full Payment Submission (FPS) should be made available shortly.