NIM01573 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport and Investment Zone employees: examples: Example 3 – Substantial change in the earner’s working arrangements

Example 3 – Substantial change in the earner’s working arrangements

An employee starts work for an employer who has business premises in an Investment Zone special tax site.  The conditions for the relief are met at the start of the employee’s employment. The employer claims the relief. 

The employer reasonably expects that the employee will work at the business premises in the Investment Zone special tax site for 3 days per week (24 hours, 60% of the employee’s working time), and that the employee will work at the employer’s head office premises outside of the Investment Zone special tax site for 2 days per week (40%, 16 hours of the employee’s working time). The 60% condition is met. In the first three months of the employee’s employment, the employee never works different working time and location arrangements. 

However, after three months the employer and the employee agree that the employee will now work 2 days at the business premises in the Investment Zone special tax sites (16 hours, 40% of the employee’s working time) and 3 days at the head office premises (24 hours, 60% of the employee’s working time). This is a substantial change in the earner’s working arrangements. The 60% condition is no longer met after the substantial change, so the employer cannot claim the relief after the substantial change. 

Note

This example also applies to an employee working in a Freeport special tax site.