NIM01571 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport and Investment Zone special tax site employees: examples: Example 1 – Employee is not a qualifying employee

Example 1 – Employee is not a qualifying employee 

The employer, who has a business premise in a Freeport special tax site, hires an employee on 1 May 2024 and pays them £3,000 per month gross (£36,000 a year).

The employee was not employed by the employer or a connected employer in the previous 24 months.

At the start of the employment the employer reasonably expects that the employee will spend 2 days (40% of their working time) at the employer’s business premises in a Freeport special tax site and 3 days (60% of their working time) working from home. The employee does not meet the 60% rule.

The employee does not meet the rules for claiming the relief so the employer cannot claim the relief.

The employer will pay secondary National Insurance contributions as normal without claiming the relief on all earnings above the Secondary Threshold (£758 per month).

Note

This example also applies to an employee working in an Investment Zone special tax site.