Each spring, we need to consider a whole host of changes that occur in relation to the up-and-coming year’s tax policies. Initially, the autumn budget in 2021 seemed to indicate there was little for payroll professionals to prepare for. As the tax thresholds are frozen until 2026, it seemed as though we might have an easy year. Think again! With the health and social care levy being introduced, new minimum wages rates, new national insurance (NI) categories and more there is plenty to consider.  

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Click here for updates on current Minimum Wage rates, statutory payment rates, Health and Social Care 1.25%, and employment allowance.

Introduction of the V NI category

In addition to the above, we would like clients to note that employers do not have to pay national insurance contributions for veterans in their first year of civilian employment after leaving the armed forces.

Class 1 secondary (employer’s) national insurance contributions relief has been available for businesses hiring veterans since 6 April 2021 and applies up to the veteran’s upper secondary threshold of £50,270 per year.

Claims can now be made to recover the secondary NIC paid for qualifying veterans in the 2021/22 tax year. This can be done through payroll reporting, if the employee previously had national insurance category A applied. An employer needs to submit a revised final payment submission (FPS) after 6 April 2022, using national insurance category letter V (if the payroll software allows). Otherwise, claims must be submitted by employers to HMRC in writing.

For 2022/23 onwards, the relief can be applied in real time by using national Insurance category letter V for qualifying veteran employees.

A qualifying veteran must have either:

• served at least one day in the regular armed forces; or
• completed at least one day of basic training.

The relief is available for a year from the date a veteran starts their first civilian job, regardless of when they left the regular armed forces.

More than one employer can claim relief for the same employee where the employee has more than one job. If the employee leaves a job and starts another within the first year, the subsequent employer can also claim for the remainder of the employee’s first year of civilian employment.

For more information, please click here.