Chancellor Rishi Sunak closed his Budget speech today (3 March) with a commitment to eight new 'freeport' sites - international gateways set to enjoy a raft of tax breaks from later this year.
New freeports in England will be launched at East Midlands Airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent.
Cranes at Liverpool docks
Businesses on these sites will benefit from 'more generous tax reliefs, simplified customs procedures and wider government support, bringing investment, trade and jobs,' the Treasury said.
Subject to agreeing governance arrangements and successfully completing business cases, these freeports will begin operations from late 2021.
Discussions with the devolved administrations are ongoing to ensure the delivery of similar deals in Scotland, Wales and Northern Ireland 'as soon as possible'.
The Government promised to legislate for powers to create ‘tax sites’ on approval in the British freeports and bring forward legislation to apply in Northern Ireland at a later date.
In his Budget speech, the chancellor said the policy: 'Exemplifies the future economy, a policy on a scale we have never done before, to bring investment, trade and most importantly jobs across the country, to replace the industries of the past with green, innovative, fast-growing new businesses, to encourage free trade and our position as an outward-looking trading nation open to the world.'
He added it was a policy 'we can only pursue now we are out of the European Union,' forgetting perhaps that a total of seven freeports were established in the UK between 1984 and 2012.
The tax benefits are set to 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, once designated. This means firms’ investments will be fully relieved after 10 years compared with the standard 33 ¹/³ 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, 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.