National Insurance Contributions Relief for Hiring Veterans: What Employers Need to Know

Supporting ex-armed forces personnel into civilian employment is not only socially valuable but can bring real business benefits. One practical incentive for UK employers is the National Insurance Contributions (NIC) relief available when hiring qualifying veterans. This relief has recently been extended — and it’s worth understanding how it works and what it means for your business.

What Is Veterans NIC Relief?

The UK government introduced NIC relief for employers who hire veterans — aimed at encouraging businesses to take on former members of the regular armed forces in their first civilian role. Under this relief:

• Employers pay no employer Class 1 secondary NICs on the earnings of a qualifying veteran up to the upper secondary threshold of £50,270 during the veteran’s first 12 months of civilian employment.

• A “veteran” is generally defined as someone who has served at least one day in the regular armed forces, including basic training.

  
  

This reduction in employer NICs effectively lowers the cost of hiring and can be a welcome financial incentive for employers looking to diversify their workforce.

Extension of the Relief: Final Window to April 2028

Originally set to expire in April 2026, the relief has now been extended until 5 April 2028. The government confirmed this extension in the 2025 Autumn Budget and accompanying Budget documents. This means businesses can continue to benefit from the zero-rated NICs relief for qualifying veterans who start their first civilian job before that date.

It’s important to note that this will likely be the final extension of the relief, with plans to consider longer-term support for veterans outside the tax system through other policy routes, such as the wider Veterans Strategy.

How to apply the relief

The relief is applied through payroll.

For most employees, employers must:

• Use the National Insurance category letter “V” in payroll.

• Apply this category to the veteran’s first 12 months of civilian employment.

• Keep evidence of the employee’s veteran status and start date.

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Using category “V” ensures that employer NICs are charged at 0% up to the Veterans Upper Secondary Threshold.

When the category “V” cannot be used

There is no veterans equivalent for certain NI categories (for example, where an employee is over State Pension age or has another special status). In those cases:

• Use the employee’s normal NI category.

• Make a manual claim to HMRC after the end of the tax year for the relief due.

  
  

Practical Implications for Employers

For many businesses — particularly SMEs — this relief can make a meaningful difference to staffing costs when bringing ex-forces talent into civilian roles. With the extension in place until April 2028, employers can plan with confidence that the relief remains available for hires over the next couple of years.

However, employers should also keep in mind:

• The relief is time-limited — make sure qualifying veterans are employed within the applicable period to benefit.

• Treat this incentive as one part of your talent strategy; while financially attractive, it also aligns with broader corporate social responsibility goals and the value of veteran skills.

  
  

Next Steps

If you’re considering hiring veterans or want to review your payroll and NIC planning:

• Check eligibility: Confirm the veteran’s first civilian employment status and service history.

• Review payroll systems: Ensure your payroll can apply the correct relief codes for NIC reporting.

• Plan hires strategically: With the relief ending in April 2028, align recruitment and budgeting accordingly.