NIM01415 - Class 1 structural overview: Zero-rate of contributions for Armed Forces Veterans: conditions

Section 7 of the National Insurance Act 2022 (NICA 2022)

Section 7 of NICA 2022 provides the conditions that need to be met for the employee to be a qualifying Veteran.

The Veteran conditions are met (see example below) if all of the following apply:

• the earner has served for at least one day as a member of any of the regular forces
• the employment is employment in a civilian capacity, and
• the earnings are paid during the period of one year beginning with the earner’s first day of employment in a civilian capacity since the earner last ceased to be a member of any of the regular forces.

If, however, the earner’s first day of employment in a civilian capacity was before the start of the 2021 to 2022 tax year then the employer can still get the relief for the remainder of the period in the 2021 to 2022 tax year that falls within the 12 months immediately after the employment commenced.

Example

Veteran A leaves HM Armed Forces on 31 December 2020.

Veteran A starts their first civilian employment on 6 July 2021.

The employer confirms whether the veteran qualifies. They will then clerically record 6 July 2021 as the start date of employment (this date is also the start of the veteran’s 12 month qualifying period).

Employers will be eligible for relief on the earnings of the veteran’s earnings from 6 July 2021 until 5 July 2022 or when the employment ceases (whichever comes first).

The employer will need to pay the associated secondary Class 1 Employers National Insurance contributions until April 2022.

If the employment ceases on 1 November 2021, the employer notes the employment end date in their records and claim this relief in April 2022 (for the period 6 July 2021 to 1 November 2021).