Following an announcement by the government in 2020, from April 2021 employers hiring former members of the UK armed forces will be exempted from any NI contributions liability on the veteran’s salary up to the Upper Secondary Threshold (UST) in the first twelve months of their employment. However, under current guidelines relief for the 2021-22 tax year can only be claimed retrospectively. In other words, the employer will still need to pay NI contributions in the usual way for the remainder of the 2021-22 tax year and make a claim for a rebate at the beginning of the 2022-23 tax year. From April 2022, employers will be able to claim the relief in real time via EPS reclaim returns.
The relief applies to all veterans, even if they only served one day in the regular armed forces, regardless of when they left, provided they have not been previously employed in a civilian capacity. The relief lasts a full 12 months from the start date of the veteran. It can also be carried over if the employment finishes within the first 12 months. This would mean a second employer could claim the relief, provided they employ the veteran in the qualifying period (the 12 months extending from the date they began their civilian employment). Subsequent employers would need to confirm the veteran’s employment history before claiming the relief.
It should be noted that the veteran will still continue to make employee NI contributions at the standard rate throughout the employer relief period.