To support armed forces personnel returning into the civilian working world, it is proposed that employers could make a saving on secondary National Insurance contributions with Veteran's Relief ...
Secondary National Insurance Contributions (NIC) always add a high cost when a business takes on a new employee. Reducing it is often a very useful way to encourage employers to recruit.
This is £8,788 per year which translates to £732 per month, or £169 per week. Unlike Primary NIC for employers, there is no Upper Earnings Limit (UEL) so the larger the employee's earnings, the more an employer pays in NIC.
However, a consultation paper has been published proposing Veteran's Relief which means there is no Secondary NIC payable for the 1st 12-months of employment, up to the £50,000 Upper Earnings Limit. The Government believes it is not possible to create a payroll solution for Veteran's Relief by April 2021 so the proposals offer a transition year where the employer continues to pay Secondary NIC, but can claim a rebate that will be credited to their PAYE account. From April 2022, the relief can be claimed in real-time using PAYE although it has not yet be confirmed how this will happen. As with all initiatives centred around PAYE, employers will need to keep evidence of an employee's eligibility to be included.
The Coronavirus Job Retention Scheme has shown the direct costs employers incur when taking on employees. As unemployment grows in a post-pandemic world, so does the need for schemes such as this one!
There will be a sunset period of three years and, as always, the devil is in the detail with this consultation running until 5th October 2020. I will report further once the details have been finalised.
The Job Retention Scheme, brought in to support jobs during the lockdown, has shone a light on direct employer costs that are incurred when taking on an employee and as unemployment figures grow, so too do the reasons for employers looking to make the best use of cost-saving policies such as this proposal.
This means the Government can monitor the success of Veteran's Relief, but the devil is always in the detail. As this consultation has lots to consider, it will close on 5th October 2020.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.