Research and analysis

Evaluation of the employer National Insurance contributions relief for veterans

Published 28 May 2025

Prepared by Ipsos for HMRC

Morwenna Byford, Rosie Gloster, and Rachael O’Donovan (Ipsos)

Research report number: 719

July 2023

The views in this report are the authors’ own and do not necessarily reflect those of HM Revenue and customs

Glossary

Appropriateness	In the context of this research, appropriateness refers to the relevance of the Veterans National Insurance contributions relief and its characteristics to its stated aim to encourage employment of veterans.
Armed forces	The Royal Navy, British Army, Royal Air Force and Royal Marines: the military forces responsible for the defence of the United Kingdom, its Overseas Territories, and the Crown Dependencies.
Armed Forces Covenant (for businesses)	A written and publicised voluntary pledge from businesses and other organisations who wish to publicly demonstrate their support for the armed forces community and commitment to treat veterans fairly.
Career Transition Partnership (CTP)	An intermediary service for employers seeking to hire service leavers and a provider of resettlement services for individuals leaving the Royal Navy, Army, Royal Air Force and Royal Marines.
Civilian job	A job with an employer that is not part of the armed forces.
Class 1 Secondary National Insurance contributions	The set of National Insurance contributions paid by employers of employees. Also referred to as employer NI in this report.
Defence Employer Recognition Scheme	A scheme that encourages employers to support defence and the Armed force community. Employer organisations can achieve bronze, silver, and gold awards if they pledge, demonstrate or advocate support to defence and the armed forces community, and align their values with the Armed Forces Covenant. This includes hiring veterans.
Employer National Insurance contributions Relief	A reduction or reimbursement of a portion of an employer’s National Insurance payments.
Proportionality	In evaluation, proportionality refers to whether the appropriate level of resources is invested to achieve the desired outcome. In this research, the desired outcome is encouraging the employment of veterans.
Veterans Upper Secondary Threshold	The upper limit of earnings that a veteran employee can earn before their employer must pay National Insurance contributions on their earnings. For veterans, this threshold of earnings is £967 per week, or £4,189 per month.
Veteran	Someone who has served at least one day in the armed forces (Regular or Reserve) or Merchant Mariners on a legally defined military operation. Sometimes referred to as a service leaver.

1. Executive summary

1.1 Introduction

HM Revenue and Customs (HMRC) commissioned research agency Ipsos to conduct a qualitative evaluation on the impact of the employer National Insurance contributions relief for the employment of veterans. The relief for employers of veterans was introduced in April 2021, as part of the Veterans’ Strategy Action Plan 2022 to 2024. The veterans’ relief for employers provides a zero rate of Class 1 National Insurance contributions (referred to as NI relief in this report) on the earnings of eligible veterans, up to the Veterans Upper Secondary Threshold of earnings, for 12 consecutive months from the start of a veteran’s first civilian job.

1.2 Methodology

This research aimed to assess the extent to which the relief encouraged the employment of veterans and understand how the savings from the relief were used by employers. The research consisted of 19 qualitative interviews with employers claiming the relief. Interviews were undertaken in January and February 2023. The findings reflect individual employer experiences. Due to the limited sample size, employer size and sector were monitored to ensure a broad range of employers were included in the research. The sample was sourced from HMRC data held about employers claiming the relief and enhanced using matching processes.

1.3 Key findings

Recruitment practices

While all employers interviewed appreciated the savings gained, the relief had not directly influenced their decisions to hire veterans. The recruitment of veterans by these employers would have taken place in the absence of the relief. When making recruitment decisions, employers considered a candidate’s aptitude, suitability, and skill for the job role. However, employers seeking highly-specialist and skilled staff in senior engineering or technology roles actively targeted veterans. Overall, the findings show that employers either intentionally sought to recruit veterans for their skills or recruited veterans by chance through their normal recruitment practices.

Awareness and implementation

Employers heard about the relief from a range of sources. Respondents in finance roles generally heard about the relief through e-bulletins from HMRC, updates to payroll software, and e-newsletters from accountancy and finance professional bodies. New employees with veteran status were also a source of awareness about the relief. Veterans typically mentioned the relief to recruiting managers or Human Resources (HR), either during or after a recruitment process.

After hearing about the relief, respondents searched for more information about the eligibility criteria, how to prove employee eligibility, and to confirm the claiming process. Respondents sought this information online either via GOV.UK or from their payroll software provider. Where respondents recalled using the GOV.UK website to learn more, they found it straightforward to navigate. It set out the information they sought about the relief in a way that was easy to understand.

Employers found claiming the relief straightforward, whether done directly through accounting software, or through third parties administering payroll.

Outcomes from the relief

Employers identified few outcomes from the relief. Employers claiming the relief absorbed the savings into their general cashflow or profits or used them to contribute to essential training costs for new employees, which would have been provided with or without the relief. Employers reported that savings from the relief were not large, and did not impact their business outcomes. The relief neither influenced the types of contracts offered to veterans nor prompted changes to employers’ recruitment methods.

Proportionality and appropriateness

To assess the proportionality and appropriateness of the relief, 5 hypothetical scenarios were tested with respondents. The scenarios included increasing the qualifying period for the relief from 12 to 18 months, increasing the qualifying earnings for the relief, decreasing the qualifying earnings for the relief, removing the relief entirely, and giving a grant of equal value to the NI relief claimed from HMRC. As employers sought to hire the most suitable candidate for the role, the hypothetical scenarios tested would not have affected previous recruitment decisions nor affect future recruitment behaviour. The relief in its current form was not found to be a proportionate or appropriate way to encourage the employment of veterans.

2. Background and methodology

2.1 Research background

HM Revenue and Customs (HMRC) commissioned research agency Ipsos to conduct a qualitative evaluation on the impact of the employer National Insurance contributions relief for the employment of veterans. The relief for employers of veterans was introduced in April 2021 as part of the Veterans’ Strategy Action Plan 2022 to 2024 which set out how the government intended to support veterans over this time. Through the relief, employers pay a zero rate of Class 1 National Insurance contributions (referred to as NI relief in this report) on the earnings of eligible veterans, up to the Veterans Upper Secondary Threshold of earnings^{[footnote 1]}, for 12 consecutive months from the start of the veteran’s first civilian job.

An employee qualifies as a veteran when they have served at least one day in the regular armed forces or completed at least one day of basic training. The relief is available to any veteran who has started their first civilian job in the qualifying period, regardless of when they left the armed forces. The 12-month qualifying period does not change if the qualifying veteran’s employment ceases, or their employer changes.

The Veterans’ Strategy Action Plan builds on the Armed Forces Covenant, which aims to ensure that people who serve, or have served, in the armed forces (regular or Reserve) face no disadvantage compared to other citizens when seeking employment.

2.2 Aims and objectives of the research

This research aimed to evaluate the impact of the employer NI relief on the employment of veterans, and to understand how savings from the relief were used by employers. The research evaluated the relief against the following criteria:

• employers’ awareness and experience of claiming the relief

• the extent to which the relief encouraged the employment of veterans

• the impact of the relief on employers that claimed it

• the proportionality and appropriateness of the relief

2.3 Methodology

The research included 19 interviews with employers that had claimed the NI relief for eligible employees, with each interview lasting between 45 minutes and 1 hour. Interviews were conducted via telephone or online, and fieldwork took place from January to February 2023. Interviews included employers across a range of sizes and sectors.

Qualitative interviews were considered the most appropriate and feasible methodology for this evaluation. 470 employers claimed the relief between April and October 2022^{[footnote 2]}. The relatively small-scale use of the relief among employers meant it was not viable to implement a quantitative method such as a representative survey as it would not produce robust and reliable quantitative evidence. A qualitative approach provided a depth of insight and rich data on employers’ awareness of the relief, their experience claiming it, and any impact it had on their organisation’s hiring practices.

There were ethical and practical challenges to identifying a counterfactual group of employers that had recruited eligible veterans without claiming the relief. HMRC’s Real Time Information (RTI) data from which the employer sample was identified did not contain details of the veteran status of employees from which employer eligibility for the relief could be inferred. Therefore, identification of employers who had hired veterans and not claimed the NI relief was not possible. There were also ethical concerns about identifying an employee’s veteran status to their employer, should this not have been previously disclosed. Full details of the methodological approach are included in Annex 1.

Sampling, recruitment, and fieldwork

A sample was provided from HMRC’s internal RTI data, and a letter was sent to organisations inviting them to take part in the research. This sample included the employer’s name, the first line of the employer’s address, and postcode.

Whilst the sample was enhanced by automatic and manual telephone matching, the contact numbers for organisations produced by the matching process were often those used by organisations for general enquires or for their HR department. They were not contact numbers for named staff. The recruitment process therefore involved identifying staff within the organisations with knowledge of or involvement with claiming the relief through others (for example, reception staff).

Given the low sample size, no sampling quotas were set. Instead, business size and sector were monitored. This ensured a range of employer sizes and sectors were included in the research. Tables detailing the number of completed interviews by business size and sector are included in Annex 1.

2.4 How to read this report

The remainder of this report is split into sections to cover the range of evidence collected. Due to the qualitative method, findings are reflective of the employers that took part in the research and provide an indication of a range of views and experiences. They do not intend to be representative of the wider population.

Where quotations are used throughout the report, the business sector has been included as an attribution to help the reader interpret the data. Additional attributions, such as employer size, have not been included alongside this to ensure responses are not disclosive. Therefore, quotes might have the same attribution, but do not necessarily come from the same employer.

Case-studies are used to provide illustrative examples of experiences, situating the findings in a specific employer context.

3. Recruitment practices

This chapter details employers’ considerations when recruiting, including the extent to which they intentionally recruit veterans.

3.1 Employer recruitment considerations

Employers were clear that they primarily considered a candidate’s aptitude, suitability, and skill when making recruitment decisions. Despite highlighting the difficult financial context of the COVID-19 pandemic and the challenges they face in sourcing candidates, employers maintained that they always prioritised finding the most suitable candidate for the job over other factors. This was consistent across organisation sector and size, as well as the level and type of role being recruited for.

“Whether they’d fit in in the work environment. [That's the] main recruitment decision factor.” (Manufacturing)

Some employers had existing commitments to veterans. These commitments included being signatories of the Armed Forces Covenant and the Defence Employer Recognition Scheme, as well as engagement with the Career Transition Partnership^{[footnote 3]}. These commitments preceded employers’ knowledge or awareness of the relief and were sometimes motivated by personal connections to the armed forces. This included cases where senior employees were veterans or organisations were led by veterans.

“We partner with them [veteran agency] around diversity and inclusivity in our workforce. We’re trying to help veterans get into the workforce.” (Manufacturing)

“Our CEO is very active in Help for Heroes, so that’s why when we see the opportunity to give it [a job] to a veteran, we do.” (Manufacturing)

Despite commitments to support veterans into employment, employers in this group continued to emphasise that the most important factor in hiring decisions remained a candidate’s suitability for the role. They made clear that in all instances they would hire a non-veteran over a veteran where they were the most suitable candidate for the vacancy.

“We took him on because we liked him. [He had the] right personality. It wasn’t because he was ex-army. He was just the best candidate.” (Wholesale and retail trade)

3.2 Intention to recruit veterans

Employers in the sample either intentionally sought to recruit veterans or had recruited a veteran by chance.

For example, employers across a range of sectors had recruited veterans unintentionally through their standard recruitment processes. Recruitment methods included posting vacancies online, on websites such as LinkedIn or Indeed, or via local newspapers and job agencies. Though these employers had not intentionally targeted veterans, they felt that veterans were likely to have traits, such as discipline and commitment, which may benefit their organisation and be suited to job roles. Consequently, they viewed veteran status as a positive attribute amongst applicants.

In other instances, employers actively targeted veterans or people serving in the armed forces to fill roles, typically in roles where suitable candidates were difficult to find. Employers looking for highly specialist and skilled staff in senior engineering or technology roles felt that veterans from similar roles in the armed forces were likely to have these skills. Awareness that veterans or those serving within the armed forces would have these skills came from either personal experience in the armed forces or because the organisation had recruited veterans into these roles previously.

“In our particular industry, transport, veterans suit us very well and probably because the man in charge of logistics now is ex-army, he's probably going to favour ex-army people and we’re happy to go along with that.” (Wholesale, storage, and logistics)

How employers sought veterans to apply for roles varied, and depended on their skills needs. Employers that sought specialist skills reported asking existing veteran employees to contact former colleagues to see if they would be open to a civilian career utilising their skills. In these instances, employers were content to wait the one-year notice period typical of people serving in the armed forces to fulfil their skills needs.

Other employers posted job adverts on websites that focused on veterans or worked with the Career Transition Partnership or Help for Heroes. Employers were clear that their motivation for targeting veterans was linked to their skills, with a secondary consideration being able to support veterans into work.

“The job advert was also put on normal sites. But we thought someone out the army would have the right skills.” (Manufacturing)

4. Awareness and implementation

This chapter details how employers heard about the employer veterans NI relief, and their first impressions and understanding, before presenting their experiences of making a claim.

4.1 How employers heard about the relief

Employers heard about the relief from a range of sources, typically through financial communications and veteran employees.

Financial communications

Respondents in finance roles generally heard about the relief through e-bulletins from HMRC, updates to the organisation’s payroll software, and e-newsletters from accountancy and finance professional bodies. There were cases where respondents heard about the relief from more than one of these sources in quick succession and could not recall which came first. However, hearing about the relief from multiple sources first created, then reinforced, their awareness.

“I saw it in the HMRC bulletin and thought, ‘oh, I'll make a mental note of that’ and then the software update flagged it again” (Education)

Several respondents in finance roles noted seeing the relief mentioned in e-bulletins from HMRC. Medium sized organisations interviewed tended to have heard about the relief from HMRC bulletins or payroll software updates. Where respondents heard about the relief from a payroll software update, this happened via messages issued by the software detailing changes in NI policies, or when they noticed an addition to a drop-down box detailing tax codes.

Veteran employees

There were cases of respondents from employers of all sizes that heard about the relief from veteran employees, usually after they were recruited. Veterans typically mentioned the relief to recruiting managers or HR during or after the recruitment process.

"I [respondent and veteran] saw it through LinkedIn, or online. I don't think I saw it through any military channels. My boss hadn’t seen it. So having already been awarded the job, I brought it to the attention of the business.” (Financial services)

“The employee told us about it… He was told about it by the veterans’ network.” (Wholesale and retail)

Veterans were a source of awareness of the relief even to organisations that had signed the Armed Forces Covenant. Respondents felt that veterans leaving the armed forces were well-briefed on how to access information and support to enable their transition to employment in civilian life. The relief was viewed as part of the offer that veterans could present to employers.

It is notable that respondents in HR roles heard about the relief from veterans, rather than colleagues in finance roles. This suggests that awareness-raising in finance teams does not necessarily spread throughout organisations. Promoting the relief to non-financial job roles could increase awareness across organisations and reach individuals in roles involved in recruitment.

4.2 First impressions and understanding of the relief

When respondents first heard about the relief, their initial response was either neutral as they did not think it relevant to them, or positive. Where employers had positive first impressions, they thought the relief could financially benefit their organisation, or support veterans into employment in general, a cause which they supported. However, the relief had not affected their own recruitment practices directly. There was no evidence that this inferred societal benefit of the relief resulted in practice.

Employers that were neutral about the relief when they first heard about it felt this way in part because they did not know at that time whether it would be relevant or applicable to their company.

”[On learning about the relief] I probably didn’t think anything of it. Thinking it would be irrelevant. When I started working for [organisation name] it became more relevant.” (Transportation and storage)

Employers that focused on the potential benefits for the organisation viewed the relief as an opportunity to save their organisation money, albeit an amount too small to have significant impact. These employers were organisations of all sizes, but smaller organisations particularly emphasised this as the relief was a larger proportion of their employer NI.

“Would never say no to something back from the taxman… so thank you very much!” (Construction)

Other employers emphasised corporate social responsibility. Even though their own recruitment had not been influenced by the relief, they believed that the relief may encourage other employers to hire veterans. Expressing opinions built upon personal values rather than the interests of their organisation, they were pleased the relief existed as something intended to support veterans experiencing the challenges of transitioning to civilian life. However, there was a gap between their views on what might drive and influence other employers’ recruitment and the behaviour of their own organisation.

“I thought it was a great idea. We are quite aware of veterans. I’ve always been aware of how difficult veterans find finding work after the forces.” (Manufacturing)

After hearing about the relief, respondents tended to search online for more information. They sought detail about the eligibility criteria, how to prove employee eligibility, and to confirm the claim process. Respondents sought this information either via GOV.UK or from their payroll software provider. Where respondents used GOV.UK to learn more, they found it straightforward to navigate and noted it clearly set out the information they needed in a way that was easy to understand.

Respondents had a good understanding of the basic characteristics of the relief. However, respondents were sometimes less aware of specific aspects of the eligibility criteria, such as that it applies to the first 12 months of employment after leaving the armed forces, rather than the first 12 calendar months. Respondents with roles more closely involved with claiming the relief, such as finance and payroll managers, had a better understanding of these criteria than those further away from the process, such as those in recruitment-related roles.

“If we recruit a veteran within the first 12 months of leaving the army, we don’t have to pay class 1 NICs up to the secondary employment threshold.” (Manufacturing)

4.3 Employer experience of claiming the relief

Employers identified eligible veterans through the application process and conversations between managers and employees. Respondents felt that a potential employee’s veteran status, and length of employment since leaving the armed forces, would be evident via the job application and the interview process. Therefore, recruiting managers and HR needed to notify payroll to confirm eligible employees.

It was the responsibility of staff in finance and payroll, whether in house or outsourced, to claim the relief. In organisations where payroll was outsourced, hiring managers notified them where an employee was eligible for the relief and provided information to support a claim. Employers felt claiming was straightforward, whether they did this directly through accounting software or through payroll third parties. There were no reports of confusion or complications.

”[I] just did it through my payroll. It was a really simple process.” (Manufacturing)

Respondents understood the relief was time limited. Once employers had an active relief claim, they tended to manage the end of eligibility via payroll software which notified them at the end of the eligibility period. There were also cases where HR managers noted in their systems when eligibility would cease. Overall, respondents felt that claiming the relief in practice had been simple.

4.4 Suggested improvements to the relief

Respondents, especially those hearing about the relief from veterans, felt that the relief could be more effectively promoted. Even though being fully aware of and making use of the relief had not impacted their own recruitment decisions, employers suggested that improving awareness of the relief could encourage other employers to hire veterans. This was the most common suggestion as to how government could encourage the employment of veterans.

To raise awareness, respondents suggested campaigns on news media, such as the radio or television, and through social media sites such as LinkedIn or Facebook. Other suggestions included targeted emails to accountants and senior managers within organisations, as well as regular reminders through HMRC communication channels where several respondents had first heard about the relief.

5. Impact of the relief

This chapter includes findings about the influence of the relief on employers, such as whether and how it affected recruitment decisions, business performance, and employer investment in veterans.

5.1 Impact of the relief on recruitment decisions and recruitment methods

The findings from this research indicate that, while employers appreciated the savings gained from the NI relief, it had not directly influenced their decision to hire veterans. The recruitment of veterans by these employers would have taken place in the absence of the relief. When making recruitment decisions, employers considered a candidate’s aptitude, suitability, and skill for the job role.

This was the case for employers that intentionally hired veterans and with those that did not. Employers consistently reported that they will always prioritise recruiting the most suitable candidate for the job. Some employers noted that the training and supervision costs of recruiting a less suitable candidate into the business, for whom they could claim the relief, would outweigh the financial value of the relief.

“I don’t think we’d ever do that, hire someone because they would be cheaper. You tend to get the wrong people.” (Transportation and storage business)

”[The relief was] definitely not a deciding factor. We would just employ the best person.” (Manufacturing business)

“It would be a bonus but not critical to the decision of who to hire.” (Other services)

Employers from groups that hired veterans intentionally, and those that had done so unintentionally, spontaneously noted that if they were faced with a choice of two equal candidates, one of whom was eligible for the relief and one who was not, the relief could be a deciding factor. However, they also explained that this situation had not occurred in practice. They saw this as a hypothetical situation, as candidates are rarely identical.

“If you had 2 equal candidates, you’d take the ex-forces guy for the relief. But you’ll probably never have that situation.” (Wholesale and retail trader)

“If we had 2 candidates exactly the same, we would have chosen him [veteran] because of the relief.” (Manufacturing business)

5.1.1 Employers that intentionally hired veterans

Employers who intentionally hired veterans continued to do so at the same rate both before and after learning of the relief. These organisations hired veterans for their skills, such as qualifications in engineering or transport and interpersonal skills. Therefore, the monetary incentive from the relief was not a factor in their recruitment decisions. A case study is provided below to exemplify this.

Case study 1: Employer that intentionally hired veterans

A wholesale retailer that transported goods to customers intentionally hired veterans for their qualifications and soft skills. The skills of veterans were well-matched to their business needs, such as HGV licences, and the ability to follow complex instructions in accordance with plans. They used their existing veteran employees to identify suitable prospective job candidates who had recently left or were planning to leave the armed forces. They recruited using personal networks and connections as they trusted that existing veteran employees would know suitably skilled candidates. After learning of the relief and claiming it for an eligible veteran, the employer continued with their previous recruitment methods. They neither altered their practices nor increased efforts to recruit eligible veterans. They reasoned that they always sought to hire the most suitable candidate for the job.

”[The relief] wouldn’t affect whether we took them on or not. £4,000 is very nice, but we’ll probably still go after the best candidate.” (Wholesale and retail trader)

“They’ve [veterans] got a number of attributes that suit us quite well. If they’re ex-logistics corps, then they have an HGV licence. They're also good at taking instructions carefully [and] when things don’t go to plan, they just get on with it.” (Wholesale and retail trader)

5.1.2 Employers that did not intentionally hire veterans

Employers that had not intentionally hired veterans also reported the relief had neither influenced them to hire veterans in the past nor would not it encourage them to employ veterans in the future. They explained they would always seek to hire the most suitable candidate for the job rather than be motivated by a relief. An example of this is described in case study 2.

Case study 2: Employer that did not intentionally hire veterans

A manufacturing business that did not intentionally hire veterans used recruitment websites to advertise job vacancies. Their recruitment method consisted of receiving CVs in response to job adverts, inviting selected candidates to interview, and appointing based on suitability. They had employed one eligible veteran at the time of the interview whom they recruited using this approach. The veteran was selected because they were the most suitable candidate among a diverse field of other applicants. The veteran told the employer about the relief. After claiming the relief, the employer did not intend to change their future recruitment practices and intentionally hire veterans. This was because they perceived the value of the relief to be relatively small, and due to the prioritisation of skills and job-matching during the recruitment process.

“The relief is not going to influence our decision to take someone on… We take the right person for the job.” (Manufacturing)

“We’re not talking a lot of money [and] they [veterans] don't have the transferrable skills… We don’t avoid employing veterans, we’d just hire the right person.” (Manufacturing)

5.2 Outcomes for employers

The savings provided by the relief were not large for the employers interviewed. Employers either absorbed the savings from the relief into their general cashflow or profits or used them to cover essential training costs for new employees.

Larger employers felt that smaller businesses may benefit from the relief because employer National Insurance contributions would make up a larger portion of their business costs. However, small businesses reported that savings from the relief did not have a significant impact on their finances. For all employers interviewed the financial contribution made by the relief to their business was appreciated.

When an active decision on what to do with savings from the relief was not made, this was because the relief was seen as a saving on an outgoing cost rather than a tangible incoming source of funds. Employers that did not make active decisions on what to do with the savings from the relief absorbed the savings into overall company cashflow.

For employers that actively decided what to do with the relief savings, the relief tended to be used to finance employee training. However, it was reported that the training would have been paid for anyway, due to it being essential for employees to perform their job role. This is exemplified in case study 3.

Case study 3: Employer that used savings from the relief on employee training

A business employed veterans as cyber-security consultants, a job role that requires a lot of training. The employer used savings from the relief to pay towards the cost of training new employees. However, the employer would have paid for the training with or without the relief, as it was essential to perform the job role. Nevertheless, the employer stressed that they were grateful for the relief, and they saw it as a reward for hiring veterans.

“Any sort of saving is beneficial to the company as we have a lot of outgoings now. They’re [veteran employees] highly paid.” (Other services)

“The relief obviously helps because we do put the money then into training the staff… the money goes toward training the staff to improve the company.” (Other services)

“We’re putting them through degree courses in IT… we pay them to go to university. We're growing a few [trained employees] for the future.” (Other services)

5.3 Other impacts

Employers reported that the relief had no impact on the contracts or working hours they offered to job candidates or current employees. The working hours and contract terms offered were based on business need and had no bearing on whether an employee was eligible for the relief. Additionally, contracts were typically offered to eligible veterans before their employer became aware of the relief.

6. Proportionality and appropriateness

A series of scenarios outlining hypothetical changes to the design of the veterans NI relief were tested with employers to assess the impact of these changes on past or future recruitment practices. Employers were asked to consider the impact of these scenarios in comparison to the current length of the qualifying period, earnings threshold, and claiming process for the relief.

The relief as currently designed:

• has a qualifying period of 12 months starting from the veteran’s first day of employment since leaving the armed forces

• has a threshold of qualifying earnings of £967 per week, or £50,270 per year

• is claimed via payroll reporting

The following hypothetical scenarios were tested with employers:

• the qualifying period increased from 12 to 18 months starting from the veteran’s first day of employment since leaving the armed forces

• the threshold of qualifying earnings increased to £1,500 per week, or £78,000 a year

• the threshold of qualifying earnings decreased to £500 per week, or £26,000 a year

• the employer could claim a grant from HMRC of equal value to the NI saving from the relief

• the veterans NI relief did not exist

Employers were probed to explain the reasoning for their response to each scenario. In instances where employers were not aware of the relief at the point of hiring existing qualifying veterans, they were probed to consider if it would have had an impact had they known about the relief.

6.1 Scenario 1: Qualifying period increasing from 12 to 18 months

Impact on previous recruitment decisions

There was no evidence that increasing the qualifying period for the NI relief on the earnings of eligible veterans from 12 to 18 months would have impacted previous recruitment decisions. Employers reported that they would have been just as likely to have employed the veteran or veterans if this were the case.

Employers attributed this to the fact that they were not aware of the relief when they hired a qualifying veteran, or because the value of the relief was not sufficient to influence their hiring decisions even should the qualifying period be extended. These reasons were not mutually exclusive, with many respondents giving both together.

Employers said that finding the most suitable candidate for the job was always their primary motivator when hiring, and that this would outweigh the financial incentive of the relief, even if the qualifying period were extended and it could be claimed for longer.

“It’s not about the money, it’s about the person. If they are the right person we hire them, and if they aren't, we won't.” (Construction)

Impact on future recruitment decisions

When asked to consider if an extension to the qualifying period would increase their likelihood of hiring a veteran in the future, employers suggested it would have little or no impact. Again, this was attributed to the relatively low value of the relief and the critical importance of finding the most suitable candidate for a role above all other factors.

In response to this scenario, large employers suggested that though it would not impact their own hiring practices, smaller employers may respond differently because it would represent a larger proportion of their employer NI contributions. Interviews with smaller employers did not reflect this suggestion.

6.2 Scenario 2: Increased threshold of qualifying earnings

Impact on previous recruitment decisions

Employers were asked to consider if increasing the threshold of qualifying earnings from £967 per week, or £50,270 a year, to £1,500 per week, or £78,000 a year, would have impacted their previous recruitment decisions. There was no evidence that an increase in the threshold of qualifying earnings would have affected past employment decisions. As reported with other scenarios, employers attributed this to not being aware of the relief at the time of hiring, and the financial incentive being too low to influence decisions. In addition, employers reflected that the veterans they employed were not earning salaries that would be affected by such an increase.

“Our main objective is getting the right person for the right job. It's an incentive to be honest; it wouldn’t stop us [hiring someone ineligible]…We’ve been employing veterans since 2010. This has just been an added bonus.” (Other services)

Impact on future recruitment decisions

Employers suggested that increasing the threshold of qualifying earnings would have no impact on their future recruitment decisions for the reasons as provided in scenario 2.

6.3 Scenario 3: Decreased threshold of qualifying earnings

Impact on previous recruitment decisions

Employers reported that the prospect of decreasing the threshold would have no impact on employment practices and recruitment decisions. This was supported by respondents’ earlier suggestion that the current threshold or a higher threshold of £1,500 per week would not have any impact either. Employers highlighted the financial supervision and training costs of making a poor hiring decision when probed to explain their response.

Impact on future recruitment decisions

Employers suggested that they would be just as likely to employ a veteran in the future as they are currently if the threshold was decreased. They reiterated that recruitment prioritises job match.

“It wouldn’t impact recruitment decisions. Our turnover is that big. It's great to have it but it wouldn’t determine need to recruit a veteran.” (Manufacturing)

6.4 Scenario 4: A grant of equal value to the relief

Impact on previous recruitment decisions

Broadly, employers suggested that receiving a grant of equal value to savings from the relief would not have impacted their previous hiring decisions. However, whilst not a common finding, it was suggested that a grant of equal value, particularly if it was paid upfront, might make them consider hiring veterans more readily. Employers explained that a grant would have most influence in financially challenging times, so would be dependent on the specific employer context.

Employers reflected that a grant of equal value to the relief might make them more likely to reinvest the money in the employee, as it would feel as if the money was allocated to an individual. Employers implied that in these instances, the money would be more likely to be spent on training, rather than absorbed into general cash flow, as was the case currently.

Impact on future recruitment decisions

Typically, employers reported that a grant of equal value to the relief would have no impact on future hiring decisions, although there were examples where employers said they might be more likely to employ a veteran if they received an upfront lump sum.

“We'd notice that, it could pay our recruitment costs if we got that money upfront. It would absolutely help bring people in if it were a one-off lump sum, a small 'drip drip' isn't as impactful on a business as a lump sum.” (Manufacturing)

The potential for a grant of equal value to create an additional administrative burden for organisations employing eligible veterans was a concern raised. The ease of the current claim process was highlighted, with interviewees suggesting that an additional administrative burden may prevent them from claiming given the relatively small financial value to their organisation.

“Personally, it’s really easy to claim this way through NI. You’re not doing an action. If we had to claim a grant, I think that would put people off.” (Manufacturing)

6.5 Scenario 5: The relief did not exist

Impact on previous recruitment decisions

Employers said that as the relief had not impacted their previous recruitment decisions, they would have made the same recruitment decisions if the relief had not existed. Employers with existing commitments to hiring veterans highlighted that their motivation for hiring veterans was social rather than financial and preceded the creation of the relief. Nevertheless, at this point employers emphasised that they were grateful for the relief and looked upon it favourably.

“It’s not a driving factor in the [recruitment] decisions, it's just a benefit that’s a by-product of the recruitment.” (Transport)

Impact on future recruitment decisions

Employers indicated that removing the relief would not impact their future employment decisions. Employers reported that they would be just as likely to recruit veterans in the future without the relief. When presented with the possibility of the relief being removed, employers restated their gratitude for the saving made by the relief, with some highlighting the social importance of supporting veterans to transition to civilian employment.

“If it didn’t exist it still wouldn’t impact our recruitment, but it would be a shame to lose it.” (Manufacturing)

7. Conclusions

This research aimed to assess the extent to which the employer NI relief for veterans encouraged the employment of veterans, and to understand how the savings from the relief were used by employers. While employers appreciated savings gained from the relief, the relief had neither directly influenced their recruitment decisions nor encouraged the employment of veterans for any employers interviewed. Recruitment of veterans by these employers would have taken place in the absence of the relief. This indicates that the relief in its current form had not encouraged the employment of veterans for the employers claiming it.

When recruiting, employers primarily considered a candidate’s aptitude, suitability, and skill for the job role. Veterans were acknowledged as potentially desirable candidates, particularly for highly-specialist and skilled vacancies in senior engineering or technology roles, which are challenging to recruit into. Veterans were also considered as potential recruits due to some employers’ corporate social commitments. The qualifying veterans recruited had been the most well-suited candidates for job openings, whether they had been targeted for their specific skills or recruited through open recruitment processes. Employer awareness of the relief often came after a recruitment decision had been taken, compounding its lack of influence on the employment of veterans.

The information provided to employers via GOV.UK about the relief’s eligibility criteria, how to prove employee eligibility, and the claiming process was found to be straightforward to navigate and easy to understand. Employers found claiming the relief straightforward, whether done directly through accounting software or through third parties administering payroll.

Employers reported that savings from the relief were not large and did not impact their business outcomes. Employers absorbed savings from the relief into their general cashflow or profits, whereas others used the savings to contribute to training costs for veteran employees. However, in these cases the training funded was essential for all new employees into the job role and would have still been provided in the absence of savings from the relief. Furthermore, the relief neither influenced the types of contracts offered to veterans, nor prompted changes to employers’ recruitment methods.

Five hypothetical scenarios were tested with respondents to assess the proportionality and appropriateness of the relief. The scenarios included extending the qualifying period for the relief from 12 to 18 months, increasing, and decreasing the qualifying earnings for the relief, giving a grant of equal value to the NI relief claimed from HMRC, and removing the relief entirely. As employers sought to hire the most suitable candidate for the role, none of the hypothetical scenarios tested would have affected previous recruitment decisions nor would they affect future recruitment behaviour.

Employers indicated that removing the relief would not impact their future employment decisions and reported that they would be just as likely to recruit veterans in the future without the relief. While these employers were grateful for the relief, in its current form it has not encouraged the employment of veterans. The relief in its current form was not found to be a proportionate or appropriate way to encourage the employment of veterans.

Annex 1

Sampling, recruitment, and fieldwork

A sample was provided from HMRC’s internal RTI data that contained 390 employers that had claimed the relief from April to September 2022. This sample included the employer’s name, the first line of the company address, and postcode. The sample was enhanced first by automatic and then manual address and telephone matching.

A letter was sent to organisations inviting them to take part in the research. The letter outlined the research, provided information about their privacy rights, how Ipsos had received their information, and an email address and a named contact that could be contacted with any questions about the research or to opt out if they wished. After an opt-out period of a week, a specialist recruitment agency contacted organisations that remained in the sample. After checking their eligibility for the research, such as whether their organisation had claimed the relief, interview bookings were made.

While the sample was enhanced, the contact numbers for organisations produced by the matching process were often those used by organisations for general enquires or for their HR department. As they were not contact numbers for named individuals, the recruitment process involved identifying the individuals within the organisations with knowledge of or involvement with claiming the relief through others in the organisation (for example, receptionists staffing a switchboard).

Given the low sample size, no sampling quotas were set. Instead, business size and sector were monitored. This ensured a range of employer types were included in the research. Tables 7.1 and 7.2 below detail the number of completed interviews by business size and sector.

7.1: Completed interviews by size

Size	Interviews
0-9 employees	2
10-49 employees	3
50-249 employees	13
250 or more employees	1
Total	19

7.2: Completed interviews by sector

Sector	Number of interviews completed
Accommodation and food industry	1
Arts, entertainment, and recreation	1
Construction	1
Human health and social work	1
Other service industries	1
Education	2
Professional, scientific, and technical	2
Transport and storage	2
Wholesale and retail	2
Manufacturing	6
Total	19

Analysis approach

Interviews were audio recorded with participant consent. Recordings were listened to by the research team and detailed notes and key quotes entered in an analysis framework. The analysis grid focused on each area of the discussion guide and captured respondent characteristics. Alongside a researcher analysis session, the framework was interrogated to look for patterns and insights between different respondent types.

This included, for example, the organisations’ course of awareness about the relief and whether they became aware of the relief before or after making hiring decisions. Quotations used throughout the report note the key characteristics of respondents to aid interpretation. Due to the qualitative nature of the research, findings are reflective of the organisations that took part in the research and are not representative of the wider population.

1. £967 per week, £4,189 per month, or £50,270 per year ↩

2. This information was included as part of a response to a Parliamentary Question: Written questions and answers - Written questions, answers and statements - UK Parliament ↩

3. The Career Transition Partnership provides comprehensive resettlement support services for personnel leaving the Armed Forces, as they transition from their military career into employment, further education, or retirement for up to 2 years after leaving in the form of employment support. ↩