Check if you can claim National Insurance relief in UK Freeport or Investment Zone special tax sites

Check which sites are:

• designated Freeport special tax sites
• designated Investment Zone special tax sites

Who can claim

You can claim the relief if you have a business premises in a special tax site. A special tax site is an area of land where businesses can claim certain tax reliefs. Special tax sites are sometimes known as Freeport tax sites or Investment Zone tax sites. A Freeport tax site is independent and separately authorised from Freeport customs sites, but they can cover the same area of land.

To claim the relief, all employees must:

• spend at least 60% of their working time in thea designated special tax site
• have started their employment between 6 April 2022 and beforebefore:
  • 6 April 2022 and 30 September 2031 for English Freeport special tax sites
  • 6 April 2022 and 30 September 2034 for Scottish Green Freeport, Welsh Freeport and Investment Zone special tax sites
• be within the first 36 months of their employment
• not have been employed by you or a connected employer in the previous 24 months

Certain employees may have a protected characteristic of disability, pregnancy or maternity. If the employee would usually spend 60% of their time at the special tax site and the employer has adjusted the time the employee must spend at the site (due to these circumstances), the 60% rule is treated as being met.

Public authorities are not able to claim the Freeport or Investment Zone employer National Insurance contributions relief.

If an employee’s working arrangements change substantially

You should re-assess whether the qualifying conditions are still met.

You must stop claiming relief when you no longer expect an employee will spend at least 60% of their working time in a single special tax site. FromThis applies from the start of employment,employment this applies unless you make adjustments to accommodate:

• disability
• pregnancy
• maternity

Publicaccommodate authoritiesfor are not able to claim the Freeportprotected orcharacteristics Investmentof Zonedisability, employerpregnancy Nationaland Insurance contributions relief.maternity.

How much relief you can claim

You will only need to pay Secondary Class 1 National Insurance contributions if your employee earns more than the Freeport and Investment Zone Upper Secondary Threshold of:

• £25,000 per year
• £2,083 per month
• £481 per week

This means that if an employee earns less than this, then no Secondary Class 1 National Insurance contributions are due.

How long you can claim the relief for

You can claim this relief for all new employees for 36 months from the start of their employment for the period that they meet the qualifying conditions.

How to claim relief

To claim the relief, you must apply the relevant National Insurance contributions category letter when running payroll. Find out how to run payroll.

National Insurance contributions category letters to support employers claiming Freeport employer National Insurance contributions relief are:

Category letter	Employee group
F	Standard category letter equivalent
I	Married women and widows entitled to pay reduced National Insurance contributions
S	Employees over state pension age
L	Employees who can defer National Insurance contributions

You must keep evidence of the qualifying conditions being met.

National Insurance contributions category letters to support employers claiming Investment Zone employer National Insurance contributions relief are:

Category letter	Employee group
N	Standard category letter equivalent
E	Married women and widows entitled to pay reduced National Insurance contributions
K	Employees over state pension age
D	Employees who can defer National Insurance contributions

You must keep evidence of the qualifying conditions being met.

Examples

An example of an employee earning below the Freeport and Investment Zone Upper Secondary Threshold

The employer hires an employee on 1 July 2024 who is paid £2,000 per month gross by the employer (£24,000 a year).

At the start of the employment the employer reasonably expects that the employee will spend 4 days (30 hours, 80%) of their working time at the employer’s business premises in a special tax site and 1 day (7.5 hours, 20%) of their working week working from home for the remainder of the 2024 to 2025 tax year so the employee meets the 60% rule.

In practice the employee never works different working time and location arrangements.

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

The employee and the employer both meet the rules, and the employer claims the relief.

As the employee’s earnings are less than the Freeport and Investment Zone Upper Secondary Threshold of £2,083 per month, the employer will pay no secondary National Insurance contributions for this employee.

An example of an employee earning above the Freeport and Investment Zone Upper Secondary Threshold

The employer hires an employee on 23 May 2024 who is paid £3,000 per month gross by the employer (£36,000 a year).

At the start of the employment the employer reasonably expects that the employee will spend all of their working time at the employer’s business premises so the employee meets the 60% rule.

In practice the employee never works different working time and location arrangements.

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

The employee and the employer both meet the rules, and the employer claims the relief.

As the employee’s earnings are more than the Freeport and Investment Zone Upper Secondary Threshold of £2,083 per month, the employer will pay secondary National Insurance contributions on the amounts above the Freeport and Investment Zone Upper Secondary Threshold.

An example of an employee not spending 60% of their working time in the special tax site

The employer hires an employee on 1 October 2022 who is paid £3,000 per month gross by the employer (£36,000 a year).

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 special tax site and 3 days (60% of their working time) working from home so the employee does not meet the 60% rule.

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

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 in the 2024 to 2025 tax year).

Get

An moreexample information

of an employee moving to a designated tax site after start of employment

FindThe outemployer informationhires andan guidanceemployee abouton Freeports.6 April 2022 who is paid £2,000 per month gross by the employer (£24,000 a year). 

FindThe outemployee’s informationworking andtime guidanceis aboutspent Investmentat Zones.the employer’s business premises which is located outside of a special tax site.

CheckThe whichemployee siteswas arenot employed by the employer or a connected employer in the previous 24 months.

The employer expands by opening an additional business premises within a newly designated Freeportspecial tax site. On 6 April 2024, the employee is transferred to the employer’s new business premises. The employer reasonably expects that the employee will spend 4 days per week (30 hours, 80%) of their working time at the employer’s business premises in the special tax sites.site, and one day per week (7.5 hours, 20%) working from home, so the employee meets the 60% rule.

CheckThe whichemployer sitescan claim the relief from 6 April 2024 (the date the employee started to meet the applicable conditions) until the 5 April 2025 (the end of their first 36 months of employment).

As the employee’s earnings are designatedless than the Freeport or Investment Zone specialUpper taxSecondary sites.Threshold of £2,083 per month, the employer will pay no secondary National Insurance contributions for this employee from 6 April 2024 to 5 April 2025.