A National Insurance contributions holiday for businesses who employ armed forces veterans comes into force 6 April 2021.
The policy allows employers to claim National Insurance contributions relief for veterans they have hired during their first year of civilian employment after leaving the armed forces.
Who qualifies?
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.