The Social Security (Contributions) (Amendment) Regulations 2025
These regulations modify the Social Security (Contributions) Regulations 2001.
They mandate that employers claiming zero-rate secondary Class 1 National Insurance contributions for employees working in designated freeports or investment zones must include the employee's workplace postcode (or an HMRC-provided alternative code) in their Full Payment Submission.
This aims to improve data collection and ensure compliance with existing legislation regarding tax relief in these specific zones.
Arguments For
Improved Data Collection and Compliance: The new regulations enhance data collection regarding employment within freeports and investment zones, allowing for better monitoring of the zero-rate National Insurance contribution relief and ensuring compliance.
Targeted Support for Designated Zones: By requiring specific postcode information, the government can more effectively target support measures intended to stimulate economic activity within freeports and investment zones.
Legal Basis in Existing Legislation: The amendments are based on the powers conferred by the Social Security Contributions and Benefits Act 1992 and are consistent with the existing framework for National Insurance contributions.
Fairness and Transparency: The requirement for postcode information adds transparency and ensures that the relief is accurately applied only to qualifying employees and employers.
Arguments Against
Administrative Burden on Employers: The additional requirement to provide postcode information may create an administrative burden for employers, particularly smaller businesses with limited resources.
Data Privacy Concerns: Collecting employee postcode information raises potential data privacy concerns, requiring robust safeguards to protect sensitive data.
Potential for Complexity and Errors: The process of obtaining and accurately reporting postcode information, especially in cases where no postcode is assigned, may lead to errors and delays in processing claims.
Alternative Approaches: Alternative methods for monitoring and verifying eligibility for the zero-rate contribution relief could be explored, potentially reducing the administrative burden on employers while still ensuring compliance.
2025 No. 144 SOCIAL SECURITY The Social Security (Contributions) (Amendment) Regulations 2025 Made 1. 2. 3. 4. 10th February 2025 Laid before Parliament 11th February 2025 Coming into force 5. 6. 6th April 2025 The Commissioners for His Majesty's Revenue and Customs make these Regulations in exercise of the powers conferred by section 175 and of, and paragraph 6 of Schedule 1 to, the Social Security Contributions and Benefits Act 1992( a ) and now exercisable by them( b ).
This section provides the title, number, and effective date of the regulations.
It also states the legal authority for the regulations, citing sections 175 and Schedule 1, paragraph 6, of the Social Security Contributions and Benefits Act 1992, used to create the current amendment.
Citation and commencement 7. 1. These Regulations may be cited as the Social Security (Contributions) (Amendment) Regulations 2025 and come into force on 6th April 2025.
This section details the official title and effective date of the regulations.
The regulations will be known as the Social Security (Contributions) (Amendment) Regulations 2025 and go into effect on April 6th, 2025.
Amendment of the Social Security (Contributions) Regulations 2001 8. The Social Security (Contributions) Regulations 2001( c ) are amended as follows. 9. In Schedule 4A (real time returns)- 10. (a) after paragraph 7 insert- 11. ' 7A. - Where the category letter or, as the case may be, one of the category letters in relation to the employee (being the appropriate letter or letters indicated by HMRC) is for an employee working within a freeport or investment zone, the postcode for the address in a special tax site where the employee works or, where no postcode is assigned, the alternative code provided by HMRC. 12. For the purposes of this paragraph 'freeport' and 'investment zone' have the meanings given in section 113 of the Finance Act 2021( d ) and 'special tax site' has the meaning given by section 113 of the Finance Act 2021( e ) (designation of special tax sites).'. 13. (b) in paragraph 11 after 'paragraphs 6, 7' insert ', 7A'.
This section outlines the specific amendments to Schedule 4A (real-time returns) of the Social Security (Contributions) Regulations 2001.
Specifically, a new paragraph 7A is added, requiring employers to include the postcode of employees' work addresses within designated freeports or investment zones.
If a postcode is missing, HMRC will provide an alternative code.
The definitions of 'freeport', 'investment zone', and 'special tax site' are taken directly from the Finance Act 2021.
Further, existing paragraph 11 is modified to include the newly added paragraph 7A in its references.
10th February 2025 Two of the Commissioners for His Majesty's Revenue and Customs EXPLANATORY NOTE (This note is not part of the Regulations) These Regulations amend Schedule 4A (real time returns) of the Social Security (Contributions) Regulations 2001 (S.I. 2001/1004). They add a requirement for employers who are claiming the zero rate of secondary Class 1 (employer) National Insurance contributions in respect of employees who work in special tax sites in freeports or investment zones in Great Britain, to include the postcode for the address at which the employee works in their Full Payment Submission. That relief is provided for by the National Insurance Contributions Act 2022 (c. 9) and claims are subject to the conditions in section 2 of that Act, in particular that the employer reasonably expects that the employee will spend 60% or more of their working time in a single special tax site in which the employer has business premises. That condition is subject to the exceptions in the Social Security Contributions (Freeports) Regulations 2022 (S.I. 2022/313). Where the special tax site has not been assigned a postcode, an officer of HMRC will provide the employer with an alternative code to use until a postcode is assigned. A Tax Information and Impact Note covering this instrument will be published on the website at https://www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. Jim Harra Justin Holliday
This is an explanatory note, not part of the legislation itself.
It summarizes the regulations' impact, clarifying the requirement for employers claiming zero-rate secondary Class 1 National Insurance contributions to report employee work postcodes in freeports and investment zones.
It highlights the relevant provisions of the National Insurance Contributions Act 2022 and the Social Security Contributions (Freeports) Regulations 2022, establishing the conditions for claiming this relief and the process for obtaining alternative codes when postcodes are unavailable.
It also mentions where to find more information.