Provide tax relief on National Insurance contributions for employers hiring veterans.
In April 2021, HMRC introduced a significant change for veterans starting their first civilian jobs - a zero rate of employers Class 1 National Insurance contributions. This relief can help veterans manage their tax obligations more effectively. However, the process for claiming this relief for the 2021-2022 tax year may require some extra steps if you're not able to apply it in real time through payroll reporting.
First and foremost, it's essential to determine whether your veteran employee meets the eligibility criteria for National Insurance relief. To qualify, an employee must have served at least one day in the regular armed forces or completed at least one day of basic training. The qualifying period begins on the first day of the veteran's first civilian employment since leaving the regular armed forces and ends 12 months later.
If your employee qualifies, the next step is to contact HM Revenue & Customs (HMRC) to confirm their eligibility and to inquire about the necessary documentation or forms required. You may need to provide evidence that the employee is a qualifying veteran, such as discharge papers from HM Armed Forces, employment contract with their previous employment, identification card, letter of employment or contract with HM Armed Forces, or P45 from leaving HM Armed Forces.
Once you have confirmed the employee's eligibility, you can proceed with the claim. Claims for the 2021-2022 tax year outside of payroll reporting and for category letters other than A should be sent to HM Revenue and Customs at the National Insurance Contributions and Employer Office BX9 1AN or BX9 1BX, depending on the number of employees. The written claim should include the employee's name, date of birth, and National Insurance number.
When making a claim, it's crucial to specify the period of overpaid National Insurance contributions and provide the account number, sort code, and account name for the bank account where you want the refund to be paid. Claims for National Insurance category A can be made by submitting a revised Final Payment Submission () after 6 April 2022 using National Insurance category letter V for qualifying veteran employees.
It's worth noting that the relief only applies to the part of the employee's earnings below the Veterans upper secondary threshold. The zero rate applies up to this threshold, and any earnings above it will be subject to the standard National Insurance contributions.
Lastly, always check the latest guidance from HMRC, as policies and procedures can change. It's advisable to keep records that show an employee is a qualifying veteran, the start date of the veteran's first civilian employment, and the employee's eligibility for at least 4 years.
If you are a veteran or representing one, it would be advisable to contact HMRC directly for the most accurate and up-to-date information regarding any available relief for the 2021-2022 tax year. Employers must pay secondary Class 1 National Insurance contributions as normal from 6 April 2021 to 5 April 2022 and claim them back from 6 April 2022 onwards. Claims outside of payroll reporting can be made by writing to HMRC from 6 April 2022, marking the letter with 'Overpaid National Insurance contributions'.
- To ensure your veteran employee benefits from the National Insurance relief, you should confirm their eligibility by providing necessary documents to HM Revenue & Customs (HMRC), such as discharge papers, identification cards, or service records.
- After confirming eligibility, you can submit claims for the 2021-2022 tax year outside of payroll reporting by writing to HMRC at the National Insurance Contributions and Employer Office, BX9 1AN or BX9 1BX, including the employee's name, date of birth, National Insurance number, and details of the overpaid National Insurance contributions.
