NIM01445 - Class 1 structural overview: Zero-rate of contributions for Armed Forces Veterans: assessment
The examples below use the rates and thresholds that apply for the 2022 to 2023 tax year for payments of earnings made on or before 5 November 2022 – see NIM01600 for more information about the 2022 to 2023 tax year and payments made after that date.
Example 1
A monthly paid Veteran has earnings of £1,600 in May 2022. The earnings fall below the Veterans Upper Secondary Threshold (VUST).
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | £1,600 - £823 = £777 x 13.25% | £102.95 |
| Secondary | £1,600 - £758 = £824 x 0% | £0 |
| Total NICs Due | £102.95 |
Category V should be used.
Example 2
A monthly paid Veteran has earnings of £6,000 in May 2022. The earnings are above the monthly Veterans Upper Secondary Threshold (VUST).
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | £4,189 - £823 = £3,366 x 13.25% | £445.99 |
| Primary | £6,000 - £4,189 = £1,811 x 3.25% | £58.86 |
| Secondary | £4,189 - £758 = £3,431 x 0% | £0 |
| Secondary | £6,000 - £4,189 = £1,811 x 15.05% | £272.56 |
| Total NICs Due | £777.41 |
Category V should be used.
Example 3
A monthly paid Veteran has a 12 month relief period which ends during the tax year on 16 September 2022. They are paid £1,400 on 30 September 2022.
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | £1,400 - £1,048 = £352 x 13.25% | £46.64 |
| Secondary | £1,400 - £758 = £642 x 15.05% | £96.62 |
| Total NICs Due | £143.26 |
As payment is made on 30 September 2022 and the Veteran is now no longer eligible for the zero rate of secondary NICs up to the VUST. Category letter V should not be used for this or for subsequent earnings periods.