NIM01445 - Class 1 structural overview: Zero-rate of contributions for Armed Forces Veterans: assessment
The examples below use the rates and thresholds that apply for the 2025 to 2026 tax year.听
Example 1
A monthly paid Veteran has earnings of 拢1,600 in May 2025. The earnings fall below the Veterans Upper Secondary Threshold (VUST).
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | 拢1,600 - 拢1048 = 拢552 x 8% | 拢44.16 |
| Secondary | 拢1,600 - 拢417 = 拢1,183 x 0% | 拢0 |
| Total NICs Due | 听 | 拢44.16 |
Category V should be used.
Example 2
A monthly paid Veteran has earnings of 拢6,000 in May 2025. The earnings are above the monthly Veterans Upper Secondary Threshold (VUST).
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | 拢4,189 - 拢1048 = 拢3,141 x 8%听 | 拢251.28 |
| Primary | 拢6,000 - 拢4,189 = 拢1,811 x 2% | 拢36.22 |
| Secondary | 拢4,189 - 拢417 = 拢3,772 x 0%听 | 拢0 |
| Secondary | 拢6,000 - 拢4,189 = 拢1,811 x 15% | 拢271.65 |
| Total NICs Due | 听 | 拢559.15 |
Category V should be used.
Example 3
A monthly paid Veteran has a 12 month relief period which ends during the tax year on 16 September 2025. They are paid 拢1,400 on 30 September 2025.
| Threshold | NICs Calculation | NICs Due |
|---|---|---|
| Primary | 拢1,400 - 拢1,048 = 拢352 x 8%听 | 拢28.16 |
| Secondary | 拢1,400 - 拢417 = 拢983 x 15% | 拢147.45 |
| Total NICs Due | 听 | 拢175.61 |
As payment is made on 30 September 2025 and the Veteran is now no longer eligible for the zero rate of secondary NICs up to the VUST. Category letter V should not be used for this or for subsequent earnings periods.