Policy background Freeports
Employers are liable to pay secondary Class 1 NICs in respect of the earnings of their employees above the Secondary Threshold (currently set at £170 per a week) except in certain cases where reliefs apply, for example, where they employ employees under 21 and apprentices under 25 years of age. The current rate of secondary Class 1 NICs is 13.8%.
	The Act introduces a new zero-rate of secondary Class 1 NICs relief for Freeport employers. Sections 1 to 4 deal with Freeports in Great Britain (GB) and section 5 provides for Freeports in Northern Ireland (NI). This measure is part of the government’s wider Freeport programme, and is intended to reduce the cost of hiring employees in a Freeport tax site and to incentivise employment within Freeports. The Government’s intention is that freeports will be national hubs for global trade and investment across the UK. They also aim to promote regeneration and job creation as part of the Government’s policy to level up communities.
	In GB, this relief provides for a zero-rate of secondary Class 1 NICs on the earnings of Freeport employees for 36 months starting from the first day of employment, up to an Upper Secondary Threshold which will be set at £25,000.
	A Freeport employer is a business which is operating from physical premises in a Freeport Tax Site. The Finance Act 2021 provides a power for the Treasury to designate Freeport tax sites in Great Britain by statutory instrument subject to negative procedure. NI Freeports and Freeport Tax Sites will be defined in a future Finance Bill. The Act intends that employers based in these designated sites will become eligible for the relief in respect of qualifying Freeport employees.
	A Freeport employee is an employed earner of a Freeport employer who spends 60% or more of their employed time in a single Freeport Tax Site in which their employer has business premises.
	This relief is available to Freeport employers in respect of new employments from 6 April 2022. In order to qualify for this relief, the Freeport employment must begin on or after 6 April 2022 and no later than 5 April 2026. If the government decides not to continue the relief after April 2026 (following a review of its effectiveness), new claims will not be permitted. Employments that start before 6 April 2026 will qualify for the relief for the full 36 months, or until termination of their employment, whichever is sooner. Freeport employers are able to claim this relief by reporting through HMRC’s Real Time Information system.
	Section 5 provides a power to make secondary legislation providing for an employer NICs relief in NI Freeports. For this reason, these Explanatory Notes are limited to describing the sections relating to the effect of this NICs change in GB.