ICAEW.com works better with JavaScript enabled.

Special tax sites postcode reporting burdensome says ICAEW

Author: ICAEW Insights

Published: 21 May 2024

Draft regulations requiring employers in freeport and investment zones to report workplace postcodes may deter claims for national insurance contributions (NIC) relief.

ICAEW’s Tax Faculty has responded to draft regulations that introduce a new reporting requirement for employers in freeport and investment zone special tax sites. Employers can claim NIC relief in respect of employees working in special tax sites where certain conditions are met. The regulations require employers making a claim to report a workplace postcode for those employees the claim relates to. 

ICAEW’s view of the proposals 

The faculty believes that claiming the NIC relief is already challenging, which may deter some employers from claiming the relief. The additional postcode reporting obligation will only add to this existing burden.  

Further, there is a fundamental problem with the relief in that, apart from remuneration details, payroll is not real time. Therefore, the reported location postcodes will always relate to a previous pay period. This is because special tax site eligibility for a pay period is not known for some employees until after the pay period has ended (eg, those who start or stop working in, or work partly inside and partly outside, a freeport or investment zone). It is only after the end of the pay period that the necessary compliance eligibility checks can be performed with certainty.  

Recommendations for HMRC 

HMRC should clarify how employers should align employees’ workplace location data to a current period’s NIC calculations. Payroll software will have an important role to play in this compliance reporting obligation. HMRC should liaise with software developers to ensure that payroll products include eligibility “checkers” and guidance to assist employers and their payroll agents.  

For further information, see HMRC’s guidance Check if you can claim National Insurance relief in UK Freeport or Investment Zone special tax sites.

Latest on business tax
The Tax Faculty

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

Further resources

Latest news
Making tax digital image

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter

Practical guidance

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.

Open AddCPD icon

Add Verified CPD Activity

Introducing AddCPD, a new way to record your CPD activities!

Log in to start using the AddCPD tool. Available only to ICAEW members.

Add this page to your CPD activity

Step 1 of 3
Download recorded
Download not recorded

Please download the related document if you wish to add this activity to your record

What time are you claiming for this activity?
Mandatory fields

Add this page to your CPD activity

Step 2 of 3
Mandatory field

Add activity to my record

Step 3 of 3
Mandatory field

Activity added

An error has occurred
Please try again

If the problem persists please contact our helpline on +44 (0)1908 248 250