As part of the UK's post Brexit trade vision, the Chancellor confirmed the go-ahead for plans for a number of freeports with tax benefits spread across the country
The government will create eight new freeports in England, areas where businesses will benefit from generous tax reliefs, simplified customs procedures and wider government support, bringing investment, trade and jobs which will regenerate regions across the country that need it most.
The Chancellor confirmed the eight locations following bidding for freeports with sites earmarked for East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames have been successful in the freeports bidding process for England.
Subject to agreeing their governance arrangements and successfully completing their business cases, these freeports will begin operations from late 2021.
As part of the rollout, the government has to legislate for powers to create ‘tax sites’ in freeports in Great Britain; it will bring forward legislation to apply in Northern Ireland at a later date.
Tax sites within freeports will need to be approved and confirmed by the government.
Businesses in these tax sites will be able to benefit from a number of tax reliefs which will be available until 30 September 2026.
There will be an enhanced 10% rate of Structures and Buildings Allowance for constructing or renovating non-residential structures and buildings within freeport tax sites, once designated. This means firms’ investments will be fully relieved after 10 years compared with the standard 33.3 years at the 3% rate available nationwide. This will be made available for corporation tax and income tax purposes. To qualify, the structure or building must be brought into use on or before 30 September 2026.
An enhanced capital allowance of 100% for companies investing in plant and machinery for use in Freeport tax sites in Great Britain will also be available. This will apply to both main and special rate assets, allowing firms to reduce their taxable profits by the full cost of the qualifying investment in the year it is made.
There will also be full relief from stamp duty land tax on the purchase of land or property within freeport tax sites in England. Land or property must be purchased and used for a qualifying commercial purpose.
In addition, full business rates relief will be available in freeport tax sites in England, once designated. Relief will be available to all new businesses, and certain existing businesses where they expand, until 30 September 2026. Relief will apply for five years from the point at which each beneficiary first receives relief.
Subject to parliamentary process and approval, the government also intends to make an employer National Insurance contributions (NICs) relief available for eligible employees in all freeport tax sites from April 2022 or when a tax site is designated if after this date. This would be available until at least April 2026 with the intention to extend for up to a further five years to April 2031, subject to a review of the relief.