There are employer National Insurance relief available for eligible employees up to and including the Freeport or Investment Zone Upper Secondary Threshold (FUST or IZUST).
This article is of interest to:
- Payroll professionals who have existing payrolls in Freeport or Investment Zones
- Payroll professionals who may have payrolls in Freeport or Investment Zones
- All software developers and all who process payrolls
As part of Spring 2024 Tax Administration and Maintenance (TAM) Day, on 18 April 2024, the Financial Secretary to the Treasury made a written statement in the House of Commons as follows:
‘Mandating Postcode provision for Freeports and Investment Zones NICs reliefs: The government is announcing its intention to bring forward a legislative change to mandate employers operating in a Freeport or Investment Zone special tax site to provide their employee’s workplace postcode to HMRC if they are claiming the relevant secondary Class 1 NICs relief through their payroll, in due course. To support this, it will also publish a four-week technical consultation on draft regulations’.
The Consultation was launched on the same day (open until 15 May 2024) and responses should be sent to nics.correspondence@hmrc.gov.uk.
Simply, from tax year 2025/26, if you use one of the National Insurance category letters that allow zero employer’s Contributions up to the FUST or IZUST, you will have to report the postcode for the employer’s location on the Full Payment Submission (FPS). This is not the same as the employee’s postcode for their home address, it is a new data field that will require populating. This affects the following letters:
- Standard – F and N
- Reduced rate – I and E
- Deferred – L and D
- Over State Pension – S and K
For Bookkeepers
Bookkeepers should note that the Freeport and Investment Zones are collectively referred to as ‘special tax sites’, indicating that the National Insurance relief is not the only consideration and other tax reliefs are available to employers operating in these areas.
We are looking at the workplace postcode, as this refers to one of the eligibility conditions in that employees are expected to spend 60% of their working time at a special tax site. Whilst the consultation is correct in saying employers will already hold this information, they do not have to report this information to HMRC. From the first payday in tax year 2025/26, payroll professionals will have to gather this information and report it on the FPS.
