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Example 7 � Substantial change in the employee’s working arrangements which ends the qualifying period, and a further substantial change which starts a new qualifying period

An employer who qualifies for the zero-rate of secondary NICs for Freeport employees in respect of an employee. »Ê¹ÚÌåÓýapp employee started work for the employer in April 2023 and the employer reasonably expects the employee to spend 60% of their working time working at the employer’s business premises in the Freeport special tax site.

In May 2024, the employee is successful in applying for a promotion outside of the Freeport special tax site. »Ê¹ÚÌåÓýapp employer can no longer claim the zero-rate of secondary NICs for Freeport employees in respect of the employee’s earnings because there has been a substantial change in their working arrangements which has resulted in them no longer spending 60% of their working time in the Freeport special tax site.  When the employee is promoted this is not a break in the existing employment and the existing employment continues.

In December 2024, the employee moves back to work at the original Freeport special tax site. This is a further substantial change in the employee’s working arrangements. In this example because the employee has continued to work for the same employer and there has not been a break in the employment, the employer can consider claiming the zero-rate secondary NICs for Freeport employees for this employment. »Ê¹ÚÌåÓýapp employer can only claim if they reasonably expect that the employee will spend 60% of their working time working at the employer’s business premises at the Freeport special tax site.

A qualifying period starts (there has been a substantial change in the employee’s working arrangements) and if all of the conditions for claiming the relief are met then the employer can do so. »Ê¹ÚÌåÓýapp employer can claim the relief for the remainder of the 3 year period, which began when the employee started working for the employer in April 2023.  »Ê¹ÚÌåÓýapp employer will stop claiming the relief in April 2026.

In the above example, if there had been a break in the employment, the employer would no longer be able to claim the relief in December 2024 because it would be considered a ‘new employment� and would not qualify because of the 2 year rule in section 2(2) of NICA 2022, that is, the employee cannot be have been employed by the employer or a connected employer in the previous 24 months.

Note

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