Veterans bring a wealth of skills, experience, and qualities to the workplace that can benefit any organisation. If you’re considering employing veterans in the UK, here’s what you need to know, with special attention to tax and National Insurance benefits.
Why hire a veteran?
Veterans typically possess valuable transferable skills and qualities developed during their military service:
- Leadership abilities and experience managing teams
- Strong work ethic and dedication
- Adaptability and resilience in challenging situations
- Problem-solving skills and quick thinking
- Technical training and specialised expertise
- Security clearances (in some cases)
Tax and National Insurance benefits
National Insurance Contributions Relief
Since April 2021, employers who hire veterans have enjoyed significant National Insurance contribution relief.
- Zero employer National Insurance contributions on the veteran’s earnings up to the Upper Secondary Threshold (£50,270 for 2025/26)
- This relief applies for the first 12 months of the their first civilian employment after leaving the armed forces
- The relief can be claimed regardless of when they left the armed forces
This can represent savings of well over £6,000, given the new Employers’ NIC rate of 15%.
How to claim the relief
To claim this relief, employers need to:
- Identify qualifying veterans in your workforce
- Use the correct National Insurance category letter (V) in your payroll
- Keep appropriate evidence of the individual’s veteran status
- For retrospective claims, use HMRC’s PAYE Online service or write to HMRC
Other financial incentives
- The Careers Transition Partnership (CTP) offers various funded training programs that can reduce onboarding costs
- Specific grants may be available through regional enterprise partnerships and veteran-focused initiatives
- The Armed Forces Covenant may provide additional funding opportunities for businesses that demonstrate their support
Tax considerations for veterans
While not direct employer benefits, understanding these can help when discussing compensation packages:
- Veterans with service-related pensions have specific tax considerations
- Some veterans may qualify for tax-free disability payments that affect their overall income needs
- War pension payments are typically tax-free
Legal and administrative considerations
When employing a veteran, be aware of:
- Record-keeping requirements for National Insurance relief claims
- Potential interaction between veteran benefits and your company benefits
- Necessary documentation to verify veteran status
Creating a veteran-friendly workplace
It isn’t just about tax and benefits, however. To create a veteran-friendly workplace, consider the following practical steps to support veterans’ success and well-being.
Creating a mentoring programme whereby veterans are paired with experienced employees can significantly improve the integration experience of the veteran.
If you have several veterans, you can create a veterans network to provide mutual support and consider joining forces with other companies.
It is vital to communicate your expectations and any feedback clearly, whilst also recognising and accommodating any special needs or circumstances.
As with all employees, understanding their skills gaps and providing training to bridge these gaps will result in a happier and more productive team member.
Many companies have found great success hiring veterans, from major corporations to small businesses and across a wide range of sectors. These employers report benefits including improved teamwork, enhanced problem-solving, and strong leadership within their organisations, all while enjoying the financial advantages of reduced National Insurance contributions.
By understanding and leveraging the tax and National Insurance benefits available while supporting those who have served their country, employers can make hiring a veteran an excellent business decision that benefits all parties involved.
Want to learn more? Get in touch with Ascend Payroll today.
