Now that the 2020/21 tax year has come to an end, there are a variety of tax filing obligations on employers. One of these obligations is…
Back in February last year the government published a consultation on freeport policy outlining its plans to introduce at least ten freeports in the United Kingdom following our departure from the European Union.
Today the Chancellor announced the location of eight new English freeports as part of his plans for an investment-led economic recovery. The freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Thames, Teeside and, more locally, Solent as well as Plymouth.
Freeports are similar to enterprise zones and will be designated geographical areas, recognised in law, where businesses can benefit from more generous tax reliefs, customs benefits, simpler planning and wider government support. Freeports are usually located around shipping ports and airports. In these zones the normal tax or tariff rules of the country do not apply.
The freeport tax reliefs announced in the Budget today, which are largely expected to last for a period of 5 years, include:
- An enhanced 10% rate of structures and buildings allowance for constructing or renovating non-residential structures and buildings within freeport tax sites in Great Britain. This means investments will be fully relieved after 10 years compared with 33 years for properties in other locations which only achieve a 3% rate.
- An enhanced capital allowance of 100% for company investment in plant and machinery for use in freeport tax sites in Great Britain.
- Full relief from stamp duty land tax (SDLT) on the purchase of land or property within freeport tax sites in England where it is purchased and used for a qualifying commercial purpose.
- Full business rates relief available to all new business and certain existing businesses that have expanded.
The government also intends to introduce a further tax relief in the form of employer national insurance contributions (NIC) relief for eligible employees in all freeport tax sites but this is subject to parliamentary approval.
It is hoped that freeports will help bring investment, trade and jobs to regenerate a number of regions across the UK. Scotland, Wales and Northern Ireland are expected to soon announce their own freeport policies.
We welcome this as great news for businesses within the Plymouth and Solent zones and will be helpful in creating and sustaining employment for these regions whilst benefitting from a number of tax reliefs.
By Victoria Alford – Tax Consultant