Payroll
...would not encourage
3. The relief will be available for a veteran’s first civilian employment for twelve months. In this option, this relief will only be available for the first civilian employment after a veteran has left HM regular armed forces for twelve months. The government indicated its preference for option one, as it is felt that this will prevent exclusion of veterans who undertake any temporary work immediately after leaving HM armed forces, but still ensures that the claims process is as simple as possible. Option number two proved to be most popular amongst survey respondents (53%), followed by option three (27%), with the government’s preferred option the least favourable (13%). (See Examples for how it is envisaged the three options would work.) Administration It is proposed that for the first year the holiday will not be directly administered via real time information (RTI), but instead a transitional arrangement will be implemented for tax year 2021/22. This arrangement will mean that organisations must pay the employer NICs amounts for that year as they ordinarily would, but will receive the amount of the relief they are entitled to via a credit to their pay as you earn (PAYE) account after the tax year has passed. From tax year 2022/23 onwards, the class 1 employer NICs will be claimed through the PAYE RTI full payment submission (FPS), to mirror other employer reliefs that are currently available. One example of this is employees on NICs table letter M, which is applied to employees aged below 21, meaning that the employer does not pay any secondary NICs on any amount below the upper secondary threshold, which sits at £50,000 per annum for the current tax year. Initial responses to the survey indicate that the majority of payroll professionals believe that the transitional two-stage approach for the initial year of the relief is appropriate, with 64% confirming their agreement, but 36% stating otherwise. Comments relating to this proposal suggest support for utilising an existing NICs table letter to administer the relief via RTI in its initial year. Similarly, there are suggestions that a new NICs table letter should be established and be available
above, and survey respondents were pretty much evenly split over whether or not the evidence requirements would deter employers from hiring veterans and claiming the relief. Some 57% confirmed that they believed it would not act as a deterrent, with 43% stating the opposite. Potential reach of the new relief The final and ultimate question of the survey asked payroll professionals whether they believed that entitlement to an employer NICs holiday would incentivise their businesses to employ either their first, or additional, veterans. Unfortunately, an overwhelming number of individuals felt that this would not encourage organisations in hiring veterans, with 64% confirming this. Some of the associated comments made it clear that their employer would hire a veteran on the basis of their skill set, experience, and suitability for the role, and not due to the employer NICs relief on offer. On an additional note, the responses to the survey all indicate that the new relief should be as simple to administer as possible, and this is applicable when establishing definitions, eligibility, evidence and record-keeping. This is to ensure that administrative burdens do not dissuade employers from accessing the new relief and are encouraged to hire veterans. n ● third employer is eligible to claim the relief for the period 5 October 2021 to 4 May 2022 (seven months). Under option 2, the veteran’s: ● first employer is eligible to claim the relief for the period 5 May 2021 to 5 August 2021 (three months) ● second employer (the pub) is eligible to claim the relief for the period 5 June 2021 to 5 September 2021 (three months) ● the third employer is eligible to claim the relief for the period 5 October 2021 to 5 June 2022 (eight months). Under option 3, the veteran’s: ● first employer is eligible to claim the relief for the period 5 May 2021 to 5 August 2021 (three months) ● second (the pub) and third employers are not eligible to claim the relief.
to use from 6 April 2021 onwards. This was explored further in an additional question, which highlighted the fact that 67% of respondents felt that a new NICs table letter should be established and utilised, whilst 20% suggested using NICs table letter M in order to make the relief easier to administer. organisations in hiring veterans, with 64% confirming...
Evidence and record-keeping The evidence and record-keeping
requirements are always key concerns when implementing new policy that impacts payroll. The government suggests that an employer must be able to check and maintain records which demonstrate: ● the individual is a veteran ● the start date of the veteran’s first civilian employment ● the end date of the veteran’s employment ● the employment is the individual’s ‘first’ since leaving HM armed forces. There are a number of documents that can be used as evidence of the Examples The examples in the consultation document, show how options 1, 2 and 3 might work in the following scenario. A veteran leaves HM armed forces on 12 December 2020, and: ● enters their first civilian employment on 5 May 2021, leaving that employment on 5 August 2021 ● works at a pub from 5 June 2021 to 5 September 2021 (i.e. partly concurrent with the first employment) ● commences employment on 5 October 2021. Under option 1, the veteran’s: ● first employer is eligible to claim the relief for the period 5 May 2021 to 5 August 2021 (three months) ● second employer (the pub) is eligible to claim the relief for the period 5 June 2021 to 5 September 2021 (three months)
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| Professional in Payroll, Pensions and Reward |
Issue 65 | November 2020
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