April 30 2024

UK Confirms 5-Year Extension to Tax Reliefs for Freeports, Investment Zones

The UK tax authority, His Majesty's Revenue and Customs (HMRC), has published a policy paper confirming that the tax reliefs for freeports and investment zones will be extended from 5 to 10 years.

This announcement follows the 2023 Autumn Statement, which confirmed the extension of relief for English freeports and investment zones. The Spring Budget 2024 included a statement that there would be a similar extension for freeports in Scotland and Wales.

The tax reliefs available in special tax sites are:

  • enhanced structures and buildings allowances;
  • enhanced capital allowances for plants and machinery;
  • secondary Class 1 National Insurance contributions relief for eligible employers on the earnings of eligible new employees up to GBP 25,000 a year for up to 3 years from the date of employment; and
  • stamp duty land tax relief for special tax sites in England.

These reliefs will benefit businesses investing and hiring new employees in, or connected with, freeport or investment zones. By extending the period over which the above tax reliefs are available, it is hoped that this will stimulate investment by providing greater certainty to investors.

The new "sunset dates" for the reliefs are:

  • 30 September 2031 for all special tax sites for English freeports;
  • 30 September 2034 for all special tax sites for Scottish green freeports and Welsh freeports; and
  • 30 September 2034 for all special tax sites for investment zones.

Legislation to give effect to the extended expiry dates for the above tax reliefs – The Special Tax Sites (Applicable Sunset Date) Regulations SI 2024/574 – has been published and will take effect from 21 May 2024.

The policy paper dated 30 April 2024 is available here and the regulations are available here.

Source: IBFD tax research platform news