NIM01574 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport and Investment Zone employees: examples: Example 4 – Substantial change in employee’s working arrangements due to reallocation of duties

Example 4 – Substantial change in employee’s working arrangements due to reallocation of duties 

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

The employer reasonably expects that the employee will work in the warehouse at the business premises in the Freeport special tax site for 4 days per week (30 hours, 75% of the employee’s working time), and 1 day of the week (25%, 10 hours) driving a lorry transporting the company’s products outside of the Freeport special tax site. The 60% condition is met. In the first 12 months of the employee’s employment, the employee never works different working time and location arrangements. 

However, after 12 months the employer and the employee agree that the employee will now work 2 days at the business premises in the Freeport special tax site (16 hours, 40% of the employee’s working time) and 3 days on transport duties, driving a lorry outside of the Freeport special tax site (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 an Investment zone special tax site.