21 Sep 2022
The government announced some time ago that it intended to establish Freeports in Great Britain. The Freeports process is now gathering pace and we thought we would let you have an update on what is happening.
So what is a Freeport?
Freeports are special areas within the UK's borders where different economic regulations apply, centred around one or more air, rail, or seaport, but can extend up to 45km beyond the port(s).
Eligible businesses in Freeports will enjoy a range of tax incentives, such as enhanced capital allowances, relief from stamp duty and employers' NIC for additional employees. Freeports will also benefit from a range of customs measures, allowing imports to enter the Freeport custom sites with simplified customs documentation and delay paying tariffs. This means that businesses operating inside designated areas in and around the port may manufacture goods using these imports, before exporting them again, without paying the tariffs and benefit from simplified customs procedures.
In March 2021, it was announced that, subject to completing the necessary authorisation processes, the following locations would become Freeports - East Midlands Airport, Felixstowe & Harwich including the Port of Felixstowe and Harwich International Port, Humber including parts of Port of Immingham, Liverpool City Region including the Port of Liverpool, Plymouth & South Devon including the Port of Plymouth, Solent including the ports of Southampton, Portsmouth and Portsmouth International Port, Thames including the ports at London Gateway and Tilbury and Teesside including Teesside International Airport, the Port of Middlesbrough and the Port of Hartlepool. The Government remains committed to establishing at least one Freeport in each of Scotland, Wales and Northern Ireland as soon as possible.
More information can be found at www.gov.uk/guidance/freeports
And what about the tax benefits of Freeports?
'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.
- 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, once designated. 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, once designated. 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, and will remain available until 30 September 2026.
- Full relief from Stamp Duty Land Tax on the purchase of land or property within Freeport tax sites in England, once designated. Land or property must be purchased and used for a qualifying commercial purpose. The relief will be available until 30 September 2026.
- Full Business Rates relief 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.
- An employer National Insurance contributions 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.
As with all things related to tax, life is never simple but if you would like to talk about these issues further, please do get in touch.