NIC Relief for Employers at Freeport Tax Sites

In the Spring Budget 2021 the Chancellor, Rishi Sunak reaffirmed the government’s commitment to delivering NIC relief for Freeport employers from 6 April 2022.

The measure will introduce a NIC relief on secondary national insurance contributions of zero rate up to the Upper Secondary Threshold for eligible employers on the earnings of eligible employees working in a Freeport tax site.

Initially this measure will focus on Great Britain (England, Scotland and Wales) where employers have physical premises in a Freeport tax site. However, the measure which also provide the same relief for Northern Ireland Freeports through the regulations which will be laid at a later date.

To qualify new employees must spend at least 60% of their working time within the Freeport tax site.  The rate will apply on earnings of all new hires up to £25,000 p.a. for initially 36 months per employee, effective from 6 April 2022 and will be legislated for in the National Insurance contributions Bill 2021. The government intends to make this relief available for up to nine years subject to periodic review.

Further details of the National Insurance contributions Bill 2021 can be found here.

HMRC will be introducing a new NI category letter and will have to make changes to their IT systems and will additional resources to ensure safe delivery of this measure.  It is estimated that the cost of these changes to HMRC will be approximately £2million.

NIC Relief for Veterans of the Armed Forces

The government has introduced NIC relief on secondary national insurance contributions for employers who employ veterans in their first job since leaving the armed forces.  NIC relief is provided up to the Upper Secondary Threshold (UST) for 12 months from 6 April 2021.  Employers should deduct NIC as normal and HMRC will be providing further guidance on how secondary national insurance contributions can be reclaimed in April 2022.

Initial guidance is in the form of a policy paper.  This was updated on 12 May 2021 and can be viewed here.

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