© Crown copyright 2021
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: firstname.lastname@example.org.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/national-insurance-contributions-relief-for-employers-who-hire-veterans/national-insurance-contributions-relief-for-employers-who-hire-veterans
This relief is only available for 12 consecutive months from the veteran’s first day of civilian employment.
This zero-rate can be applied up to the upper secondary threshold.
This relief is available from April 2021. From April 2021 to March 2022, employers will need to pay the associated secondary Class 1 National Insurance contributions as normal and then claim it back retrospectively from April 2022 onwards.
From April 2022 onwards, employers will be able to apply the relief in real time through PAYE.
Further information on how employers will be able to claim it back will be published before April 2022.
Employers will only be able to claim National Insurance contributions relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces. This includes anyone who has completed at least one day of basic training.
The relief is available to all employers of veterans regardless of when the veteran left the regular armed forces, providing they have not previously been employed in a civilian capacity.
Employments that qualify
Relief is available for any civilian employment. A civilian employment is one that is not part of the armed forces, and includes employments with organisations that may have strong links to HM Armed Forces, such as the Ministry of Defence or NATO. Employment with a reserve organisation is not considered as civilian for the purpose of this relief and do not trigger the qualifying period (outlined below).
Self-employed individuals do not pay Class 1 National Insurance contributions. Therefore, self-employed businesses do not qualify for this relief. In addition, self-employed work does not trigger the qualifying period.
Limits on the relief
Relief will apply on earnings up to the upper secondary threshold. If a veteran’s earnings are above the threshold, employers can apply the relief on the part of the earnings below the threshold. This approach is in line with existing reliefs for under 21s and under 25s apprentices.
Employers can claim relief if they employ a veteran during the qualifying period. The qualifying period starts on the first day of the veteran’s first civilian employment since leaving the regular armed forces and ends 12 months later.
Employers can claim relief even if the employment starts before 6 April 2021, but will only be able to claim for the remaining qualifying period.
The first day of employment will be the start date taken from the employment contract between the employer and the employee.
This 12 month period does not change if the employment finishes. This means that current and future employers can also claim this relief if they employ a veteran within their qualifying period.
Subsequent employers must determine the first day of the veteran’s first civilian employment, and confirm that the veteran is employed with their business during the qualifying period.
Veteran A leaves HM Armed Forces on 31 December 2020.
Veteran A starts their first civilian employment on 6 July 2021.
The employer confirms whether the veteran qualifies. They will then clerically record 6 July 2021 as the start date of employment (this date is also the start of the veteran’s 12 month qualifying period).
Employers will be eligible for relief on the earnings of the veteran’s earnings from 6 July 2021 until 5 July 2022 or when the employment ceases (whichever comes first).
The employer will need to pay the associated secondary Class 1 Employers National Insurance contributions until April 2022.
If the employment ceases on 1 November 2021, the employer notes the employment end date on their local records and claim this relief in April 2022 (for the period 6 July 2021 to 1 November 2021).
Veteran B leaves HM Armed Forces on 1 February 2021.
Veteran B starts first civilian employment on 30 June 2021.
The employer confirms that the veteran qualifies. They will then clerically record 30 June 2021 as the start date of employment (this date is also the start of the veteran’s 12 month qualifying period).
The employer will need to pay any associated secondary Class 1 Employer National Insurance contributions until April 2022.
The veteran stays in this employment indefinitely. In April 2022, the employer will claim the relief for the period 30 June 2021 to 5 April 2022 and start applying the relief through PAYE from 6 April 2022 until 29 June 2022.
Veteran C leaves HM Armed Forces on 1 August 2021.
Veteran C starts their first civilian employment on 30 August 2021.
Employer A confirms that the veteran qualifies, and will record 30 August 2021 as the employment start date (this date is also the start of the veteran’s 12 month qualifying period).
The employer will need to pay the associated secondary Class 1 Employer National Insurance contributions until April 2022.
On 30 November, Veteran C enters into an employment with Employer B. Employer B needs to establish that they are a qualifying veteran and determine the start date of Veteran C’s first day of civilian employment (in this scenario, with Employer A). Employer B can then claim this relief until 29 August 2022.
Employers are responsible for checking and maintain records that show:
- that an individual is a qualifying veteran
- the start date of the veteran’s first civilian employment
To claim relief, employers will need to have taken reasonable care to confirm the veteran’s eligibility and confirm, if applicable, the start date of the veteran’s first civilian employment.
An employer can request any of the following documents during onboarding, to confirm that the veteran qualifies:
- veteran’s Identification card (which marks their time in the armed forces)
- letter of employment or contract with HM Armed Forces
- veteran’s P45 from leaving HM Armed Forces
- discharge papers from HM Armed Forces
- the employment contract of an individual’s previous employment (in order to determine the start date)
Employers will also need to keep records that demonstrate the employee’s eligibility for the relief for at least three years after the end of the tax year to which they relate.
Claiming the relief
Relief will be available from 6 April 2021.
From April 2021 to March 2022, employers will need to pay the associated secondary Class 1 Employers National Insurance contributions.
From April 2022, employers will be able to claim back the associate National Insurance contributions that would have otherwise been relieved. Employers will need to keep records that demonstrate they are eligible for relief for those periods. Further details on this process will be published before April 2022.
From April 2022 onwards, HMRC will put measures in place to enable employers to apply the relief through PAYE.