Last reviewed 19 January 2021

HM Revenue & Customs (HMRC) has invited comments on proposals that will enable employers to apply a zero-rate secondary Class 1 Employer National Insurance contributions (NICs) on the salaries of veterans during their first year of civilian employment.

With a deadline for submitting comments of 8 March 2021, the details of the consultation can be found at

This includes a technical overview of the legislation which is likely to be of interest to accountants and tax specialists.

If the Government decides to proceed with the plan, it will be introduced with effect from 6 April 2021 and will provide employers with a relief worth up to £5000 for each qualifying veteran they hire.

To be eligible, a veteran must have completed at least one day of basic training in Her Majesty’s regular armed forces. Employers will be able to claim this relief for the 12-month period starting on the first day of the veteran’s first civilian employment since leaving the regular armed forces.

Subsequent and concurring employers will be able to claim the relief during this period. This zero-rate will apply up to the Upper Secondary Threshold.

This latest initiative follows an earlier consultation, published in July 2020, which examined ways of supporting veterans’ transition into civilian life through employment.

Details of the responses received can be found at

This confirms that, if the proposed legislation is adopted, employers will be able to claim the relief in real time through PAYE from the tax year following when the powers come into effect.

Given that it has not been possible to develop a payroll solution for April 2021, employers will need to pay the secondary Class 1 NICs on the earnings of eligible veterans and then claim the relief for the 2021–2022 tax year from April 2022 onwards.

Details on the record employers need to maintain to claim this relief will be published before April 2021.

Comment from BrightHR’s CEO Alan Price

Employers will more than likely welcome this initiative for many reasons; one major reason being that a tax relief may attract employers to hire ex-veterans which will in turn boost the UK economy as we battle the coronavirus and head into a post-pandemic world.

It is uncertain at this stage, however, what will become of this initiative and how employers recovering from the pandemic can factor this into their long-term business plans.