COMPLIANCE
NICs holiday for businesses employing veterans
LoraMurphy ACIPP, CIPP policy and research officer, provides details of a recent consultation exercise andmembers’ responses
F irst announced in the 2019 Conservative party manifesto, which pledged to “reduce National Insurance contributions for employers if they employ ex-service personnel”, the government will from 6 April 2021 offer those businesses that employ veterans a twelve-month class 1 National Insurance contributions (NICs) holiday. It is hoped that this will serve to encourage more employers to take on veterans, thereby supporting their transition to civilian life through employment. In July, HM Revenue & Customs (HMRC) published the document Supporting veterans transition to civilian life through employment (https://bit. ly/2GoVDxC) to consult on how best to encourage employment of veterans through a NICs relief for employers that hire veterans, and to seek views on policy design to ensure the relief is as effective as possible. The document observes that “we are also interested in hearing from employers, software providers and accountants on the practical implementation of this policy, and from civil society groups and others who may have ideas and knowledge relevant to this important initiative.” The consultation closed on 5 October. At the point of writing, the CIPP’s policy and research team were running a survey to collate the views of payroll professionals.
Definitions The consultation explored a variety of areas relating to the relief that will be provided to employers, with emphasis placed on differing definitions. The government intends to use an established definition of ‘armed forces’, which includes all branches of HM armed forces and the Brigade of Gurkhas. There was overwhelming support for this within preliminary responses to the survey, with 93% in agreement. Although the established definition includes ‘Reserve’ organisations within HM armed forces, the government proposes to exclude employment of reservists from this relief. Some 80% of respondents stated that they felt that this was correct, but with all agreeing that it is important to clarify the exact definitions of these elements of the policy to ensure that the relief is accurately administered. The consultation also discussed the appropriate definition of ‘civilian employment’. The proposed definition relates to an individual who is gainfully employed in Great Britain and Northern Ireland, either under a contract of service or in an office with earnings, but where that employment is not part of HM regular armed forces. It is hoped that this will keep the relief as simple as possible to administer. Four in five respondents to the survey agreed with this.
Eligibility Several questions were raised within the consultation in relation to eligibility requirements for the employer relief. One of the main queries related to whether somebody needs a specific length of service in order to be classed as a veteran. A resounding number of survey respondents stated that this should be the case. It was widely accepted that the relief should not be restricted to those veterans who left HM armed forces in tax year 2021/22, and that it should be available regardless of when an individual stopped serving. Support for only allowing an individual this relief once in their lifetime, and not multiple times if returning to and leaving HM armed forces, was also clear within the survey responses. A substantial chunk of the consultation was dedicated to the precise definition of the initial twelve months of civilian employment. The government has proposed three different options, as follows: 1. The relief will be available for twelve months starting from the veteran’s first day of civilian employment. In this option, the relief will be available for multiple concurrent employments during the twelve-month eligibility period. 2. The relief will be available for twelve months of civilian employment, and subsequent breaks in employment do not ‘use up’ the relief. In this option, the relief will be available for multiple concurrent employments for twelve months of employment.
...to seek views on policy design to ensure the relief is as effective as possible.
| Professional in Payroll, Pensions and Reward | November 2020 | Issue 65 18
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