More Help for Veterans Entering Civilian Work
27th August 2020
Finding work after a military career can be a challenge, and it’s one that RIFT has always fought to help veterans overcome. From working with employers to explain the benefits of taking on former MOD personnel to directly helping Service leavers to set up their own businesses, RIFT is proud to support those who sacrifice their own safety for the sake of ours.
One potentially positive development in creating prospects for Armed Forces veterans is a new way of handling secondary National Insurance Contributions for former MOD personnel. Secondary NICs are paid by employers at a rate of 13.8% of an employee’s earnings, once those earnings hit the Secondary Threshold (ST). Right now, the ST is set at £732 per month (£8,788 per year). Secondary NICs are different from the primary ones paid by employees, in that there’s no upper threshold. As the employee’s salary rises, their employer’s secondary NICs rise with it.
As with pretty much every rule in the HMRC playbook, there are a few exceptions and exemptions to the secondary NIC regulations. Employers who take on apprentices under the age of 25, for example, are in a very different situation. Anything the apprentice earns up to £50,000 in a year won’t lead to any secondary NICs. The same goes for employees under the age of 21. These exemptions are designed to lighten the load on employers who take on younger people either as full employees or for on-the-job experience and training.
Now, new rules look set to come in next year to make the decision to put ex-MOD personnel to work an easier and more valuable one. While UK businesses are genuinely starting to wake up to the many advantages these candidates bring to the table, there’s still a strange cultural resistance against putting veterans to work on Civvy Street. Given the vast array of high-level skills and invaluable personal qualities ex-Service personnel have to offer, any move that dismantles these obstacles is clearly heading in the right direction.
Under the proposed new system, employers taking on Armed Forces veterans will be granted “relief” on secondary NICs. Naturally, there are a couple of limits placed on this. Firstly, the relief would only apply for the first 12 months of a veteran’s first civilian job. On top of that, the same limits would apply as with other similar reliefs, meaning anything the employee earned over the £50,000 threshold would still be liable for secondary NICs. Even so, the move would bring down the cost of taking on veterans by £5,500 each for that first year.
Another slight hitch is the amount of additional paperwork involved. Employers will have to prove that their workers qualify, for one thing. A few solutions have been proposed as to how this would work, but it’s still likely to trip some businesses up at first until they get used to the system. While the proposal would see these rules kick off in April 2021, getting the paperwork all squared away in time to claim the relief might be a bit unrealistic. As a result, employers will probably still have to make the NIC payments at first, and then claim back a rebate on them later. After this first “transitional year”, it’s expected that they’ll be able to claim the relief in real time instead.
Obviously, there are still several details that need to be hammered out before the new system gets rolling. Even so, it’s great to see some of the barriers and obstacles facing former Armed Forces personnel being tackled. The government’s consultation about all this stays open until early October, so watch this space for more details and developments as they arise.
If you've left the Armed Forces within the last 4-years and haven't claimed a tax refund for your travel, training and other work expenses then use our free tool now to check if you're due money back.
If you're still serving but have postings of under 24 months in the past 4-years you may be due a tax refund.
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