20 November 2023
The Department for Business and Trade (DBT) issued a press release on 20 November, confirming that the government will be extending its investment zone programme from five years to ten years. This will subsequently mean that investment zone tax reliefs will also be extended for this period, up until September 2031. The press release indicates that the government funding and tax reliefs on offer are now £160 million.
We may see discussion of this in the chancellor’s Autumn Statement on 22 November. As we’re sure you’re aware, a reduction in the rate of employer National Insurance contributions (NICs) is available for investment zone tax site-based businesses for employees working within that area, where the conditions to claim the relief are met.
As a reminder, it will be possible to apply a zero-secondary rate of employer NICs for such employees’ earnings above the secondary threshold (£9,100 per annum) up to and including an upper secondary threshold (£25,000 per annum) equivalent to the freeport upper secondary threshold, where the conditions to claim the relief are met. The balance of earnings above this upper secondary threshold will be charged at 13.8%. However, the calculation of primary class 1 NICs is unaffected.
Eligibility
For employers based in Great Britain:
- they must have business premises in the investment zone tax site
- the employee must be a new hire whose employment starts on or after 6 April 2022 and before the applicable sunset date, and the employee cannot have worked for that employer (or an employer connected to the employer) in the previous 24 months. At the start of the qualifying period, the employer must reasonably expect that the employee will spend a minimum 60% of their working time in the investment zone tax site
- eligibility to claim will expire 36 months from the employee’s start date of their employment
- there’s no limit on the number of employees an employer can claim for
- employers will self-assess eligibility for the relief using available guidance from HMRC
- in respect of off-payroll workers, the relief can be claimed by the liable secondary contributor for the eligible employee.
Details supporting investment zone employers based in Northern Ireland will be released as soon as they’re available.
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