Who can claim
You can claim the relief if you have a business premises in a Freeport tax site.
To claim the relief, all employees must:
- spend 60% of their working time in the Freeport tax site, unless you have made adjustments to your employee’s working arrangement to accommodate:
- disability
- pregnancy
- maternity
- be new employees from 6 April 2022, and before 6 April 2026, within the first 36 months of their employment
- not have been employed by you or a connected employer in the previous 24 months
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 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.
HMRC have issued 4 new National Insurance contributions category letters to support employers claiming this relief. They 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.
Examples
An example of an employee earning below the Freeport Upper Secondary Threshold
The employer hires an employee on 1 July 2022 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 Freeport tax site and 1 day (7.5 hours, 20%) of their working week working from home for the remainder of the 2022 to 2023 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 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 earnings above the Freeport Upper Secondary Threshold
The employer hires an employee on 23 May 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 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 Upper Secondary Threshold of £2,083 per month, the employer will pay secondary National Insurance contributions on the amounts above the Freeport Upper Secondary Threshold.
An example of an employee not spending 60% of their working time in the Freeport 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 Freeport 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 (£737 per Month).
Get more information
Find out information and guidance about Freeports.
Check which sites are designated Freeport tax sites.
