NIC relief for employers of armed forces veterans

A new relief has been introduced for employers of armed forces veterans which allows them to benefit from a zero rate of secondary National Insurance contributions on the earnings of the veteran up to a new upper secondary threshold. However, while the relief applies from 6 April 2021, for 2021/22 employers must pay secondary contributions as normal and claim the relief retrospectively from 6 April 2022.

Nature of the relief

To encourage employers to employ armed forces veterans, no secondary Class 1 National Insurance contributions are payable on the veteran’s earnings during the first 12 months of their first civilian employment since leaving the armed forces, unless their earnings exceed a new upper secondary threshold. The new upper secondary threshold for veterans will be set at the same level as the existing upper secondary thresholds for employees under the age of 21 and apprentices under the age of 25. For 2021/22, this is £967 per week, £4,189 per month and £50,270 per year. The threshold is also aligned with the upper earnings limit applying for primary (employee’s) Class 1 National Insurance purposes.

If earnings exceed the new upper secondary threshold, employer’s contributions are payable as normal on the excess at the usual rate of 13.8%.

The relief applies from 6 April 2021. Where the veteran’s first civilian employment after leaving the armed forces started after 6 April 2020 but before 6 April 2021, the relief will apply from 6 April 2021 until the first anniversary of the start date.

Subsequent and concurrent employers will also be able to benefit from the relief during the relief period.

Who counts as a veteran?

For the purposes of the relief, an armed forces veteran is someone who has served at least one day in the regular armed forces. This includes someone who has undertaken at least one day of basic training.

Giving effect to the relief

The relief is available from 6 April 2021 and applies for 2021/22, 2022/23 and 2023/24 (although the Treasury have the power to extend the relief to later tax years). However, the way in which the relief is given depends on the tax year. HMRC have published guidance for employers who hire armed forces veterans explaining how the relief works.

2021/22 only

For 2021/22 only, employers who take on an armed forces veteran in the first year of their first civilian employment since leaving the armed forces will need to pay secondary Class 1 National Insurance on the veteran’s earnings as usual to the extent that they exceed the secondary threshold (set at £170 per week, £737 per month and £8,840 per year for 2021/22). Employers will be able to claim the relief retrospectively from 6 April 2022.

2022/23 onwards

For 2022/23 and 2023/24, employers will be able to apply the relief in real time through the payroll, as is the case for the reliefs available to employers of employees under the age of 21 and employers of apprentices under the age of 25.

Talk to us

Talk to us to find out whether you are able to benefit from the relief, and how much it is worth to you.

July 26, 2021

Paying CJRS grants back

As the Coronavirus Job Retention Scheme (CJRS) enters its final months, now is the time to review grants that you have claimed under the scheme, and pay back any amounts claimed in error. You may also choose to repay voluntarily funding that you have received under the scheme if your business does not need it. Some notable large companies in the retail and hospitality sectors have opted to do this.

Recap: CJRS

The CJRS allows employers to claim grants to pay employees who are furloughed or flexibly furloughed. Under the scheme, the employee must be paid 80% of their usual pay for their unworked hours, subject to a cap of £2,500 a month or equivalent. The employer can claim some or all of this back from the Government under the CJRS. If the amount that you have claimed is less than the amount you need to pay the employee (as will be the case for July, August and September 2021), you must make up the shortfall.

Repayment options

If you have claimed too much or you want to make a voluntary repayment, you can either:

correct the overpayment in your next claim; or
get a payment reference from HMRC and repay the money within 30 days.

HMRC have published guidance which explains how to make a repayment.

Making a correction in your next claim

If you still have employees who are furloughed or flexibly furloughed and you will be making another claim under the CJRS, you can correct the overclaim when you do your next claim. If you have another claim to make, you should adjust that claim rather than making a repayment direct to HMRC.

To correct an overclaim, you should initially work out your next claim as usual. If you are sending a file containing your claim details, you should prepare this as normal without taking account of the amount overclaimed.

You will then need to work out the amount you have overclaimed, and deduct this from the amount that you are claiming this time. The result is the amount that you will need to enter in the ‘claim amount’ box on the claim form. You will also need to enter the amount that you have overclaimed in the ‘overclaim’ box. For example, if you are making a claim for July 2021 for £20,000 and you have realised that you overclaimed £2,000 for June 2021, you will need to enter ‘£18,000’ in the claim box. This is the net amount that you are claiming for July 2021 after adjusting for the overclaim. You will also need to enter ‘£2,000’ in the overclaim box.

Paying HMRC back

You should only make a payment direct to HMRC if you do not have further claims to make and are not able to repay the amount that you owe by adjusting a subsequent claim. Before making a payment, you will need to get a payment reference from the online service. It is important that you use the correct reference.

Payments can be made to the following HMRC account using faster payments, CHAPS or Bacs:

sort code: 08 32 10;
account number: 12001039;
account name: HMRC Cumbernauld.

Payments can also be made by debit card or using a corporate credit card (but not a personal credit card).

Deadlines

If you have overclaimed, you must tell HMRC by the later of:

90 days after the date on which you received the money to which you were not entitled; and
90 days from the date on which you ceased to be eligible to keep the grant because your circumstances changed.

To avoid being charged a penalty, you will need to notify HMRC and repay the overclaimed grant within this time frame.

We can help

Get in touch to find out how we can help you sort out any mistakes you have made when claiming grants under the CJRS.

July 19, 2021

SEISS grant 5

Claims for the fifth grant under the Self-Employment Income Support Scheme (SEISS) will open from late July. If, based on your tax returns, HMRC think that you are eligible for the grant, they will contact you in mid-July and give you a date from which you can submit your claim. The fifth grant will cover the period from May 2021 to September 2021. However, unlike previous grants, the amount of this grant will depend on the extent to which you suffered a reduction in your turnover in the year from April 2020 to April 2021 as a result of the impact of the COVID-19 pandemic.

Eligibility

If you are a self-employed individual or an individual member of a partnership and you meet the eligibility criteria, you will be able to claim the fifth and final SEISS grant. To qualify, you must have traded in 2019/20, and also in 2020/21. You must either be trading currently, or have been trading but are unable to do so temporarily as a result of COVID-19 restrictions. In addition, you must have filed your 2019/20 tax return by midnight on 2 March 2021.

As previously, you will only qualify for the grant if your trading profits are not more than £50,000 and they account for at least 50% of your total income. In deciding whether this test is met, HMRC will look first at your return for 2019/20. If you are not eligible based on your 2019/20 income, HMRC will then look at your returns from 2016/17 to 2019/20 inclusive and work out whether you are eligible based on your average income for those years.

When making your claim, you must declare that:

you intend to trade; and
you reasonably believe that there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or the inability to trade as a result of COVID-19 during the period from May 2021 to September 2021.

Amount of the grant

If you meet the eligibility conditions, the amount of your grant will depend on the extent to which your turnover fell as a result of the COVID-19 pandemic during the year to April 2021.

Turnover fallen by at least 30%

If your turnover fell during this period by at least 30% as a result of the impact of the pandemic, your fifth grant will be worth 80% of three months’ average trading profits, subject to a maximum grant of £7,500.

Turnover fallen by less than 30%

If your turnover fell in the year to April 2021 as a result of the impact of COVID-19, but by less than 30%, you will be able to claim a grant worth 30% of three months’ trading profits, subject to a maximum grant of £2,850.

Need to keep records

You should keep evidence in support of your claim, showing how your business has been affected by the COVID-19 pandemic, and the extent to which your turnover and profits have fallen as a result.

Get in touch

Although HMRC’s rules do not allow us to claim the grant on your behalf, we can check whether you are eligible, and, if you are, help you work out the extent to which your turnover has fallen as a result of the pandemic, and the amount that you are able to claim.

July 12, 2021

Accessing the Government Gateway

From 15 June 2021, all businesses and organisations will need multi-factor authentication in order to sign into the Government Gateway.

Multi-factor authentication

Businesses and organisations that use HMRC’s online services and which do not currently receive an access code by text or voice call, or direct to an authenticator app, will need to add a device, such as their mobile phone number, to their Government Gateway account in order to be able to sign in. Once a device has been added, you will receive an access code every time you sign in. The changes are being made to further protect Government Gateway accounts from fraud.

You do not need to do anything until the next time that you sign in. At this point you will be asked to add your new device.

Already have multi-factor authentication?

If you already have multi-factor authentication on your business’s or organisation’s Government Gateway account, nothing will change. You can continue to sign in as usual, receiving your access code in the normal way.

Additional users

If your business or organisation needs to allow employees to access your Government Gateway account, this can be done using multi-factor authentication. To do this, use the administrator and assistant functionality in your Business Tax Account to create additional users. Each user will have their own multi-factor authentication, and will need an access code to sign in.