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Spring Budget 2021_businesses
Read time: 4 minutes
Last updated: 3 Mar 2021
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Spring Budget 2021: Generous tax reliefs for new Freeports within the UK

The Freeport locations announced today will be recognised in law as geographical areas where businesses can benefit from tax reliefs to incentivise investment.

From 9 March 2021 new Freeports in England will be launched at East Midlands Airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent and are intended to support the policy of levelling up the towns, cities and regions of the United Kingdom. Further Freeports are expected elsewhere in the UK.

Businesses on these sites will benefit from more generous tax reliefs, simplified customs procedures and wider government support, bringing investment, trade and jobs. The tax benefits include:

  • Enhanced capital allowance (ECA) available to companies for qualifying expenditure on plant and machinery for use within Freeport tax sites. This will allow businesses to reduce their taxable profits by the full cost of the qualifying investment in the year it is made. 
  • Enhanced rate of Structures and Buildings Allowance (SBA) of 10%, available for businesses on qualifying expenditure for new non-residential structures and buildings constructed within Freeport tax sites. This will accelerate full relief of investment within 10 years rather than the current  33 years.
  • Full relief from Stamp Duty Land Tax for purchases of land and buildings in Freeport tax sites. There are some qualifying conditions for the relief. 
  • Full business rates relief in Freeport tax sites in England.

The measures will remain available until 30 September 2026.

The ECA and SBA changes are essentially timing changes that will bring forward deductions but do not impact long term tax liabilities. In respect of the ECA, businesses may also want to consider if the super-deductions are available instead as they offer a timing and long term tax saving.  

The stamp duty and business rates relief could represent a significant tax saving for businesses looking to operate in a Freeport.

About the authors

Alastair McQuater

+44 (0)20 7556 1427
mcquatera@buzzacott.co.uk

Liam McKeevor

+44 (0)20 7556 1244
mckeevorl@buzzacott.co.uk
LinkedIn

From 9 March 2021 new Freeports in England will be launched at East Midlands Airport, Liverpool, Felixstowe, Humber, Plymouth, Thames, Teesside, and Solent and are intended to support the policy of levelling up the towns, cities and regions of the United Kingdom. Further Freeports are expected elsewhere in the UK.

Businesses on these sites will benefit from more generous tax reliefs, simplified customs procedures and wider government support, bringing investment, trade and jobs. The tax benefits include:

  • Enhanced capital allowance (ECA) available to companies for qualifying expenditure on plant and machinery for use within Freeport tax sites. This will allow businesses to reduce their taxable profits by the full cost of the qualifying investment in the year it is made. 
  • Enhanced rate of Structures and Buildings Allowance (SBA) of 10%, available for businesses on qualifying expenditure for new non-residential structures and buildings constructed within Freeport tax sites. This will accelerate full relief of investment within 10 years rather than the current  33 years.
  • Full relief from Stamp Duty Land Tax for purchases of land and buildings in Freeport tax sites. There are some qualifying conditions for the relief. 
  • Full business rates relief in Freeport tax sites in England.

The measures will remain available until 30 September 2026.

The ECA and SBA changes are essentially timing changes that will bring forward deductions but do not impact long term tax liabilities. In respect of the ECA, businesses may also want to consider if the super-deductions are available instead as they offer a timing and long term tax saving.  

The stamp duty and business rates relief could represent a significant tax saving for businesses looking to operate in a Freeport.

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Looking to invest in a Freeport site but not sure of how to apply for the tax benefits or if they will benefit your business?  Please get in touch with us for more information.

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