Veteran's Relief: Seconday NIC Savings For Employers
The Government are asking what employers think ...
Posted by Roger Eddowes on 14/09/2020 @ 8:00AM
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 ...
The proposed Veteran's Relief will support armed forces personnel back returning to the civilian working world!
copyright: bellphotography423 / 123rf
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.
"Currently, Secondary NIC is charged at 13.8% on earnings that exceed the Secondary Threshold (ST)!"
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.
"There will be a three year sunset period!"
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.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the proposed veteran's relief, call me on 01908 774320, leave a comment below or click here to ping over an email and let's see how I can help.
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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