NIM01515 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport and Investment Zone special tax site employees: qualifying conditions for employees

Section 2 of the National Insurance Contributions Act (NICA) 2022

Employers can apply the zero-rate of secondary Class 1 NICs up to the Freeport Upper Secondary Threshold (FUST) or Investment Zone Upper Secondary Threshold (IZUST) for employees who meet the following conditions:

• the employee starts a new employment on or after 6 April 2022 and, no later than 30 September 2031 for English Freeport special tax sites or, 30 September 2034 for Scottish Green Freeport, Welsh Freeport and Investment Zone special tax sites
• the earnings are paid during the first 36 months from the start of the employment
• the contribution is paid in respect of earnings paid in a tax week all of which is in a qualifying period of the employment
• at the time the qualifying period begins, the employer reasonably expects that, in the qualifying period, their employee will spend 60% of their working time in a single Freeport or Investment Zone special tax site in which the employer has a business premises, see NIM01520

An employment is a new employment if the employee has not been employed by that employer or a person connected with the employer in the previous 24 months before the start of the employment. The definition of a person connected with the employer is within the meaning of section 993 of the Income Tax Act 2007. Guidance about ‘connected with’ can be found at PTM027000.

Qualifying period

The qualifying period begins with either the start of the employment or a substantial change in the employee’s working arrangement and ends with either the end of the employment or a substantial change in working arrangements.

Substantial change in working arrangements

Examples of a substantial change in the working arrangements are:

• a reduction/increase in hours
• a redistribution/addition of duties
• a change to the employee’s permanent workplace