Key Facts

• Clause 1 introduces a zero rate for secondary class 1 national insurance contributions up to £25,000 per annum.
• New clause 5 requires the Government to conduct and publish a review on the impact of the freeport relief by 31 January 2023.
• The Committee is urged not to delay the investment associated with clause 1.
• Eight freeports were announced in England by the Chancellor in March 2021.
• Clause 1 introduces a new secondary class 1 NICs relief for freeport employers with a threshold set at £25,000 per annum.
• The amendment proposes conditions including paying a living wage, implementing climate strategies, and conducting environmental impact assessments.
• The Living Wage Foundation defines the living wage as £9.30 outside London and £10.85 inside London for 2020-21.
• Freeport tax sites must have a job creation review by April 30, 2022, to be published by July 31, 2022.
• The conditions of eligibility review for NIC relief must commence by September 30, 2023, and be published by December 31, 2023.
• The relief is conditional on employment not commencing until 6 April 2022.
• The relief applies to new hires from April 2022 as stated in the Freeports Bidding Prospectus published in autumn 2020.
• Clause 2(1)(d) requires that at the time the qualifying period begins, a freeport employer must reasonably expect that the earner will spend 60% or more of their employed time in a single freeport tax site.
• Clause 2 sets conditions for a freeport employer to qualify for relief.
• Freeport employers can apply zero-rate NICs relief for up to 36 months starting April 2022.
• A freeport employee must spend at least 60% of their working time in the freeport tax site and not have been employed by that employer in the previous 24 months.
• Clause 4 excludes eligibility for freeport relief if conditions are met only as a result of an avoidance arrangement.
• Avoidance arrangements include those contrived, abnormal, or lacking genuine commercial purpose.
• HMRC has been closely involved in policy design to minimize potential abuse and is well-staffed to address concerns.
• The new clause requests a review by April 30, 2022.
• The review must be published and laid before Parliament by July 31, 2022.
• Reviews for each financial year from 2021-22 to 2023-24 are required.
• Government made a manifesto commitment to support ex-service personnel in their employment.
• Policy was announced by Chancellor during the spring Budget 2020.
• Consultation received 37 written responses from stakeholders.
• Draft clauses for technical consultation were published on 11 January 2021, closing on 8 March 2021.
• The relief will be available initially for three years starting April 2021.
• For the tax year 2021-22, employers can claim relief from 2022 onwards.
• Employers can receive up to £5,500 in savings per veteran.
• Clause 6 provides a 0% rate of secondary class 1 NICs up to an upper secondary threshold for the tax years 2022-23 and 2023-24.
• The relief is available retrospectively for the 2021-22 tax year.
• Employers can claim the relief in real time from April 2022 onward.
• Clause 8 allows the Treasury to set different upper secondary thresholds for veterans and freeport earners.
• The veteran UST for 2021-22 tax year is £50,270 in their first full year of civilian employment.
• The freeport UST for 2022-23 tax year is set at £25,000.
• The Government announced a £500 support payment last September.
• Similar schemes were announced by the Scottish and Welsh Governments shortly after.
• Clause 10 extends the exemption for employee and employer class 1 and class 1A NICs to the self-employed.
• Clause 12 provides for regulations under the Bill to be made by statutory instrument.
• Regulations made under clause 3(3) relate to freeport conditions and are subject to the affirmative procedure.
• Regulations under clauses 5 and 8 also relate to freeport conditions and secondary class NICs relief, and are similarly subject to the affirmative procedure.
• New Clause 6 aims to provide NIC relief for employees of green manufacturing companies.
• New Clause 7 designates wind turbines and electric vehicles as products manufactured with the aim of increasing environmental standards.
• The Government has provided £150 million annually since 2013 for the Aerospace Technology Institute, match-funded by industry.
• There is a £84.6 million investment to develop zero-emission flights.
• Scottish Government made £500 thank-you bonuses to NHS Scotland and social care workers.
• The UK Government does not believe the new clause is appropriate or necessary.
• UK Government provided over £5.9 billion in additional funding for the Scottish Government this year through the Barnett formula.