Impact assessment

National Insurance holiday for the employers of veterans - screening equality impact assessment

Published 6 May 2022

Project objectives

Employer National Insurance contributions (NICs) is a tax paid by employers on employee wages up to the Upper Secondary Threshold. The contributions are paid at a rate of 13.8%. 

The 2019 Conservative manifesto committed to the introduction of a NICs holiday for employers of veterans. 

With effect from April 2021, the government will introduce a National Insurance holiday for employers that hire former members of the UK regular armed forces. 

This will enable employers to claim this NICs holiday for eligible veterans for a maximum of one year from the beginning of the veteran’s first year of civilian employment. 

The holiday will exempt employers from any NICs liability on the veteran’s salary up to the Upper Secondary Threshold (UST). The employer will claim by applying a new Veterans National Insurance contribution category.

A full digital service will be available to employers since April 2022; however, transitional arrangements will be in place for employers of veterans hired in the 2021 to 2022 tax year (there will be a need for the employer to maintain manual records for year 1 and evidence of veteran status). Employers should continue to pay Class 1 Secondary NICs as normal and reclaim these retrospectively.

The employer of the veteran will be eligible for the NICs relief at the rate of 0% on Class 1 Secondary NICs for up to 12 months from the point the veteran starts their first civilian job. The relief will be capped at the UST. The UST is set at £50,270 per annum for the 2021 to 2022 and 2022 to 2023 tax years in line with existing reliefs for the under 21s and under 25s apprentices. The relief will be applicable across all the employments of the eligible veteran. If the veteran has already had a civilian job, their new employer will verify the start date of the first civilian employment and claim the NICs holiday for the remainder of the eligibility period. Once the 12-month eligibility period comes to an end the employer will no longer be able to claim the NICs holiday. 

This policy will have a life span of 3 years unless the government lays a statutory instrument to continue offering this relief.

Please note that this screening Equality Impact Assessment (EQIA) is only related to the operational delivery of the measure.

What customers will need to do

What customers need to do as a result of the change

Businesses/employers will be required to utilise a new NIC category letter on the employers return using the Full Payment Service (FPS) claim the NIC’s relief.  

How customers will access this service

Employers can claim the relief for the 2021 to 2022 tax year from April 2022 by way of an employer submission(s) via Real Time Information (RTI), providing their payroll software allowed them to do so. If not, a manual claims process will be in place. From April 2022 onwards, a new NICs Category letter will be available for employers in their RTI submissions for newly employed veterans, for a maximum period of 12 months for each veteran.  

When customers need to do this

Employers need to be aware that this measure was introduced from April 2021 and that they will be able to claim retrospectively for the 2021 to 2022 tax year from April 2022.  

Assessing the impact

We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty; and section 75 of the Northern Ireland Act: racial groups, disability, sex, gender reassignment, sexual orientation, age, religion or belief, pregnancy and maternity, marriage and civil partnership, carers, political opinion (for Northern Ireland only), people who use different languages (Including Welsh Language and British Sign Language).

There is no evidence to suggest any specific impacts on customers within any of the protected characteristic groups listed above. Online guidance, including Welsh language guidance will be available. Employers have access to the employer helpline.

For employers who are exempt from online payroll reporting due to being unable to use a digital channel, written guidance will be provided as well as extra support services as required. These employers may be unable to use digital channels due to a disability, their age or their religion or belief. It should be noted that only the guidance for paper return filers has been impacted and an existing paper format for submission of RTI returns is available for digitally exempt customers.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group. None have been identified.

A full equality impact assessment is not recommended.