With a deadline for submitting comments of 8th March 2021, the details of the consultation include a technical overview of the legislation which is likely to be of interest if your client is an accountancy and tax specialist firm. It is available to view on the Government website – gov.uk.
If the Government decides to proceed with the plan to offer tax relief for the first year of an employer having hired an ex-veteran, it will be introduced with effect from 6th 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. The zero-rate will apply up to the Upper Secondary Threshold of employer’s NICs.
This latest initiative follows an earlier consultation, published in July 2020, which examined ways of supporting veterans’ transition into civilian life through employment.
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, if your client is eligible, they will need to pay the secondary Class 1 NICs on the earnings of eligible veterans and then claim the relief for the 2021 to 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.
This initiative may be welcomed by your client for many reasons; one major reason being that a tax relief may make it easier for them to recruit new staff, especially if they’ve been severely impacted by the coronavirus pandemic.
This will in turn boost the UK economy as we head into a post-pandemic world. It is uncertain at this stage, however, what will become of this initiative and how recovering employers (from the pandemic) can factor this into their long-term business plans.
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