The government has announced in today's Budget that the following areas will be granted freeport status: East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.
In addition to being a customs duty and import VAT free zone (until the goods enter the UK market), freeports will benefit from the following tax reliefs:
- 10% rate of Structures and Buildings Allowance (as opposed to the national 3% rate) on constructing or renovating non-residential structures and buildings.
- Enhanced capital allowance of 100% for companies investing in plant and machinery for use in the freeport. The enhanced allowance applies to both main and special rate assets.
- Full SDLT relief on the acquisition of land or property purchased and used for a qualifying commercial purpose.
- Full Business Rates relief.
These reliefs apply until 30 September 2026; it is not clear what will happen after that point. The government also intends to make an employer National Insurance contributions relief available for eligible employees in all freeport sites from April 2022 - April 2026, with the intention to extend for up to a further five years to April 2031.
The government intends that the freeports become national hubs for global trade and investment across the UK, which promote regeneration and job-creation and create hotbeds for innovation. It will be interesting to see whether this raft of tax breaks, together with simplified planning rules, encourages investment in and relocation of businesses to the freeport sites. It will also be interesting to see how modern standards of transparency and corporate social responsibility are applied to the freeport sites.
Read the policy papers here and here.
Return to Budget 2021.
Follow us on LinkedIn for updates from Travers Smith Tax.
