Labour slammed after admitting firms that help veterans into work could lose vital tax breaks

Labour has admitted it could axe tax breaks for firms who employ Armed Forces veterans if it needs to re-balance the books.

The disclosure sparked accusations of a ‘betrayal’ of war heroes as it would land firms who employ them with a tax bombshell.

It comes just before millions prepare to honour our veterans on the 80th anniversary of VE Day on May 8.

Relief on employers’ National Insurance contributions for firms who employ ex-personnel was introduced under the previous Tory government and expires next April. It was designed to help veterans integrate back into civilian life by encouraging firms to employ them.

But Treasury minister James Murray said in a reply to a parliamentary written question that the tax break was ‘under review’.

Chancellor Rachel Reeves has already landed businesses with a growth-destroying £25 billion tax bombshell after hiking employers’ NI contributions in her October Budget. But it did not apply to firms hiring veterans.

Shadow defence secretary James Cartlidge said: ‘This is incredibly disappointing. Scrapping tax breaks to help veterans get back into the workplace would be a hammer blow, just as Labour’s existing tax rise on jobs is already reducing vacancies.

Chancellor of the Exchequer Rachel Reeves reacts as she speaks with soldiers and staff at the Stanford Training Area on October 20, 2024 near Thetford, Britain

Chancellor Rachel Reeves has already landed businesses with a growth-destroying £25 billion tax bombshell after hiking employers’ NI contributions in her October Budget . But it did not apply to firms hiring veterans

Former veterans minister Johnny Mercer said: ‘This is outrageous. Labour must not go ahead with this damaging hike. Helping those who put their lives on the line for us is a basic duty of any government’

‘We delivered huge gains for veterans under the last Government – including a voice at the Cabinet table [with a dedicated minister] – but it seems like the Labour Government is intent on undermining that inheritance. 

On the cusp of the 80th anniversaries of VE and VJ Day, our veterans deserve better.’ 

Former veterans minister Johnny Mercer added: ‘This is outrageous. Labour must not go ahead with this damaging hike. Helping those who put their lives on the line for us is a basic duty of any government.’

The tax relief is due to expire in April 2026. But it could be targeted by Ms Reeves this autumn if she needs to come back for more spending cuts to meet her strict self-imposed fiscal rules.

In the parliamentary question, Mr Cartlidge asked if Ms Reeves plans to extend the tax break after April next year or scrap it. Mr Murray replied: ‘The Government keeps all taxes under review.’

The relief for firms who employ veterans allows them to claim a zero NI rate for a veteran’s earnings for their first year of employment.

A Treasury spokesman said the NI relief, on salaries up to £50,270, was extended for 2025/26 but admitted that it was ‘under review’ beyond April next year.

Almost 15,000 veterans have left the Forces in the past year and Tory MPs argue that they now face much worse job prospects.