Freeports have recently been launched across the UK with Thames and Tees already operating and making use of the additional benefits that Freeports bring.
Freeports are special areas within the UK’s borders where different economic regulations apply. Freeports in England are centred around one or more air, rail, or seaport, but can extend up to 45 km beyond the port boundary.
The Freeports model includes a comprehensive package of measures, comprising tax reliefs, customs, business rates retention, planning, regeneration, innovation and trade and investment support.
Enhanced Capital Allowances
Companies in Freeport zones who invest in qualifying plant and machinery will be able to offset the cost against any taxable profits in the first year. This gives them an immediate increase in post-tax profit as well as helping improve cash-flow.
The new scheme is expected to run from 1 October 2021 for five-years. Full details have not yet been announced, but we expect this to be welcomed by businesses. With the removal of the original enhanced capital allowances scheme from 1 April, this now provides a replacement in Freeports and an added incentive for companies to invest.
Enhanced Buildings and Structures
Capital spent on renovating non-residential buildings and structures will attract an annual 10% relief against taxable profits spread over ten years. This is a significant improvement on the relief currently available nationwide, which is set at 3% p.a. over thirty three and a third years.
The new relief will be available on defined expenditure, providing building contracts are agreed and signed and the qualifying assets are brought into use between 1 April 2021 and 30 September 2026 which we are beginning to see across the UK.
Now Is The Time To Invest
We believe that Freeports offer excellent opportunities for global investors to deploy capital into and for businesses to move to. Freeports will be a real opportunity to spur economic investment and drive the regeneration of disadvantaged areas of the UK. The added property and employment tax incentives are likely to attract investors and businesses who might otherwise have overlooked these economically challenged parts of the UK.
Freeports are also likely to act as catalysts for Government policy including Levelling Up, Building Back Better and Net Zero 2050. This also supports many Investors by allowing them to fulfil their ESG commitments whilst investing into increasingly more sustainable buildings.