Embedded smart camera systems are gaining popularity for a number of real world surveillance applications. However, there are still challenges, i.e. variation in illumination, shadows, occlusion, and weather conditions while employing the vision algorithms in outdoor environments. For safety-critical surveillance applications, the visual sensors can be complemented with beyond-visual-range sensors. This in turn requires analysis, development and modification of existing imaging techniques. In this work, a low complexity background modelling and subtraction technique has been proposed for thermal imagery. The proposed technique has been implemented on Field Programmable Gate Arrays (FPGAs) after in-depth analysis of different sets of images, characterizing poor signal-to-noise ratio challenges, e.g. motion of high frequency background objects, temperature variation and camera jitter etc. The proposed technique dynamically updates the background on pixel level and requires a single frame storage as opposed to existing techniques. The comparison of this approach with two other approaches show that this approach performs better in different environmental conditions. The proposed technique has been modelled in Register Transfer Logic (RTL) and implementation on the latest FPGAs shows that the design requires less than 1 percent logics, 47 percent block RAMs, and consumes 91 mW power consumption on Artix-7 100T FPGA.