Policy and Research Officer The Chartered Institute of Payroll Professionals (CIPP)
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The future of employer national insurance breaks

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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.

11th Aug 2021
Policy and Research Officer The Chartered Institute of Payroll Professionals (CIPP)
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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.

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Replies (7)

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By Hugo Fair
11th Aug 2021 19:29

Unfortunate typo in the section on Veteran's scheme where it says "For the first year of the policy’s implementation, RTI solution was available" ... the word 'no' has been lost just before RTI!

Otherwise an exemplary article based on the state of currently known facts - which unfortunately, from a software developer perspective, are more than somewhat sketchy/incomplete:
* what proof will be required as to whether a new employee meets criteria of being a Veteran?
* who will be responsible (and how) for ascertaining when such an employee commenced their first civilian employment (with a different employer) under this scheme?
* does the 12 month limit on duration apply even if Veteran has gap of several months after a brief job that didn't work out?
* how will an employee's time spent at a Freeport site be defined in terms of whether or not it contributes to "at least 60% of their working time" - and measured how?
* will the condition "cannot have worked for the employer in the period 24 months prior" still apply if that previous employment (say 6 months ago) was within the Freeport scheme?

Phrases like "Employers will then need to liaise with HMRC at the end of the tax year" do not bode well for either software developers or employers.
And irrespective of excuses, what is the point of having a start date for a scheme that means ER has to 'subsidise' the employment costs for a year or more (particularly given HMRC's record recently for excessively delayed payment of valid claims for repayment)?
If the objective is to encourage new employments that might otherwise not have happened, then this isn't how to do it!

Thanks (3)
Replying to Hugo Fair:
Richard Hattersley
By Richard Hattersley
12th Aug 2021 09:11

Thanks for your comment, Hugo. The article has now been updated to correct the veteran scheme typo.

Thanks (0)
Replying to Hugo Fair:
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By neiltonks
12th Aug 2021 10:29

I suspect the "cannot have worked for the employer in the period 24 months prior" clause will apply to previous employments in the Freeport. The relief is limited to the first three years of employment, but without this kind of clause the employment could be terminated on a Friday and the person re-employed the following Monday in order to "reset the clock". Or am I being over-cynical?

Thanks (0)
Replying to neiltonks:
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By Hugo Fair
12th Aug 2021 11:59

Probably not, Neil, (the over-cynical bit that is) ... although it'll be a sad day if we start competing for the crown of leading cynic!

My point, of course, was that software developers are no longer given adequate guidance (let alone specification) until too late in the day (if at all).
The 7 questions I raised were merely the first that occurred to me as I started typing - and don't even touch on technical issues (just those that will impact on employers' operating procedures but that don't appear to have registered in the thoughts of whoever is currently responsible within HMRC).

Anyway, it's good to see you marching on as I start the slow slide into retirement ... the future's always interesting either way!

Thanks (2)
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By Paul Crowley
11th Aug 2021 20:48

Good in principle as Vets should be indirectly assisted by being just a tiny bit cheaper than others.
RUINED by HMRC not being able to to fix the IT system to deliver

HMRC and IT
Just do not work together well

Thanks (3)
By coops456
12th Aug 2021 09:16

This is the very opposite of tax simplification!

Thanks (4)
By SteveHa
12th Aug 2021 09:19

Quote:
For the first year of the policy’s implementation, no RTI solution was available

The most digitally advanced tax authority in the world my @$$.

Thanks (5)