NI, tax avoidance and relief
Effective April 2021
From 6th April 2021 employers who hired former members of the UK regular armed forces during the first year of their civilian employment are eligible for a zero-rate of secondary National Insurance contributions for up to 12 months.
Any earnings of qualifying veterans hired from 6th April 2021 are eligible for retrospective National Insurance contributions relief.
Employers are obliged to continue to pay National Insurance contributions as normal until 6th April 2022. At this point employers will be able to claim back any National Insurance contributions that qualify for relief in two ways:
Through a revised Full Payment Submission for the employee(s) concerned showing the new National Insurance category letter ‘V’ if enabled in the payroll software.
By letter to HMRC requesting relief. The full details are available on HMRC’s website.
Claim National Insurance contributions relief for veterans as an employer:
CLAIM RELIEF
For tax years 2022 to 2023 onwards, employers will be able to apply the relief through real time information as normal by using National Insurance category letter ‘V’.
Employers must ensure that they keep records showing that they have hired a qualifying veteran, such as veterans ID card, discharge papers, or P45 from HM Armed Forces.
Effective 6 April 2022
• F – Freeport standard category letter• I – Freeport married women & widows entitled to pay reduced NICs• S – Freeport employees over the state pension age• L – Freeport employees who can defer paying 12% NICs and pay only 2% because they are already paying it in another job
• V – Veterans standard category letter
Click here to claim NIC relief for employees working in a Freeport tax site
Click here to claim NIC relief for Veterans
Ongoing
HMRC would like to raise awareness of when Category M should be used.
Category M does not ever apply after an employee reaches the age of 21. It is the employee’s age at the time of payment that determines which National Insurance contributions category should be used. Two examples:
If an employee turns 21 earlier than or on pay date Category M should not be used for that period’s pay
If an employee turns 21 after pay date then Category M should still be used for that period’s pay
This prompt is based on insight which suggests that employers are not changing the National Insurance contributions Category until the month after the employee turns 21.
HMRC ask that employers review their payroll systems and ensure that the correct date of birth is recorded, and any incorrect dates of birth are rectified.
This will help reduce any payroll errors in future.
With inflation at a 40-year high and household bills continuing to rise, many employees are worried about their finances and are looking to their employers for support.
One of the ways employees can make their money go further is by claiming tax relief on work related expenses.
HMRC are asking employers to raise awareness of this online service by sharing information on internal newsletters, during meetings and on notice boards for example.
HMRC have suggested sharing the following message with employees.
Some employees can get tax relief on expenses their employer has not reimbursed them for. This includes things like:
Uniforms and work clothing
Buying equipment
Professional fees and subscriptions
Using their own vehicles for work travel (this does not mean their journey from home to work)
Working from home
Employees can check if they're eligible.
Eligibility checker