The future of employer national insurance breaksby
The government has recently introduced two new national insurance contribution (NIC) holidays for employers. One has already been implemented (from 6 April 2021) and the other is due to commence from tax year 2022-23.
The CIPP’s Lora Murphy discusses how payroll professionals will process both new reliefs through payroll software.
NICs relief for employers who hire veterans
This new relief is available for employers of veterans, and was made available from 6 April 2021. Employers will not be required to pay any secondary Class 1 NICs on the earnings of qualifying veterans for 12 months following the first date of their first civilian employment after leaving the regular armed forces.
The relief can be applied up to a newly established veteran’s upper secondary threshold (VUST). This will be the same as the upper secondary threshold (UST) for tax year 2022-23 (£50,270 per annum).
For the first year of the policy’s implementation, RTI solution was available, but this will be put into place from 6 April 2022 onwards. Therefore, for the initial year, employers are required to pay the associated Secondary Class 1 NICs as normal, and then claim them back retrospectively at some point from 6 April 2022. Finer details on how this process will work will be released by HMRC in the form of guidance prior to next April.
From 6 April 2022, employers will be able to place qualifying veterans onto NIC category letter V, which will mirror the existing NIC category letter A, without the application of employer NICs up to the VUST. This will allow employers to claim the NICs relief in real time, rather than having to wait until the following tax year to claim it.
In scenarios where a different NIC category letter should be assigned to the veteran employee (eg B, T, C, W, J, Q), the advice to employers is to apply the normal existing standard category for the tax year. Employers will then need to liaise with HMRC at the end of the tax year in order to arrange a manual process for the adjustment, allowing the relief to be claimed outside of software.
NICs relief for freeport employers
The government has confirmed its intention to create up to a maximum of 11 freeports in various locations in the UK. In order to create more employment opportunities to some of the most deprived, a reduced rate of employer’s NICs will be applicable to all Freeport based businesses.
Register for free to continue reading
It’s 100% free and provides unlimited access to the latest accounting news, advice and insight every day. As well as access to this exclusive article, you can:
View all AccountingWEB content
Comment on articles
Watch our digital shows and more
Access content now
You might also be interested in
Lora Murphy is a Policy and Research Officer at the CIPP. She covers the latest hot topics in payroll and is involved in consultations that can shape the future of policy and how payrollers operate.