As part of an ongoing consultation process, HMRC is considering the creation of Freeports across the UK. These Freeports will be located around air, sea and rail ports and will be governed by different customs and tariff status. Local authorities, operators of ports, airports and rail, and businesses will bid to create a designated Freeport, and where successful will benefit (for a limited time) from enhanced tax relief.
The intention is for the first Freeports to be created in 2021.
Further details are to be published by HMRC over the coming months but the proposals include an enhanced, Freeports-specific tax relief and Structures and Buildings Allowance. This could include enhanced capital allowances on Freeport sites – building on the current Enterprise Zone Allowances whereby 100% first year tax saving is given for new investment in new plant and machinery. Alternatively there may be the introduction of an annual investment allowance for Structures and Buildings Allowance (SBA) for enterprises within the Freeport tax sites with all tax saving up to a predetermined limit being given in the first year as opposed to over 33 years for the current SBAs.
Work developing the proposed allowances is ongoing at HMRC and details such as timing, scope and rates of relief of these measures will be set out in the Bidding Prospectus – details of which will be available in due course. Regardless of which options are chosen, the intention is to introduce them for a limited amount of time.
Lovell Consulting Comment
Businesses have suffered unprecedented disruption to their cash-flow over the last year. Many will find the opportunity to reduce their tax bills and retain cash in their business through investing in undeveloped sites an attractive and timely opportunity to invest. It will be important to carefully consider the measures introduced and for taxpayers to seek expert advice. Lovell Consulting can help.