NIM01575 - Class 1 Structural Overview: zero-rate of secondary NICs for Freeport employees: examples: Example 5 – Substantial change in employee’s working arrangements due to additional responsibilities

Example 5 – Substantial change in employee’s working arrangements due to additional responsibilities

An employee starts work for an employer and the conditions for the relief are met at the start of the employee’s employment. The employer claims the relief.

The employer reasonably expects that the employee will work in the Freeport business premises for 5 days per week (40 hours, 100% of the employee’s working time). The 60% condition is met. In the first 18 months of the employee’s employment, the employee never works different working time and location arrangements.

However, after 18 months the employee is promoted and the employer and the employee agree that the employee will now work 2 days at the Freeport business premises (16 hours, 40% of the employee’s working time), 2 days visiting clients (16 hours, 40% of the employee’s working time) and 1 day at head office, which is outside of the Freeport tax site (8 hours, 20% of the employee’s working time). This is a substantial change in the earner’s working arrangements. The 60% condition is no longer met after the substantial change, so the employer cannot claim the relief after the substantial change.