Following a bidding process, the Budget announced the location of 8 English Freeport tax sites to begin operating from late 2021, one of which is Plymouth. Businesses in these tax sites will be able to benefit from a number of tax reliefs from the date that the Freeport tax site has been designated:
• Full relief from SDLT on the purchase of land or property and used for a qualifying commercial purpose. This relief will apply to qualifying transactions taking place until 30 September 2026. Availability of the relief will be subject to a ‘control period’ of up to 3 years.
• An enhanced 10% rate of Structures and Buildings Allowance for constructing or renovating non-residential structures and buildings. This will mean that firms’ investments will be fully relieved after 10 years compared with the standard 33.5 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 100% capital allowance rate for companies investing in plant and machinery for use in the Freeport tax sites. This will allow 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 Business Rates 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.
• Subject to Parliamentary process and approval, it is intended that employer National Insurance contribution relief will be made available for eligible employees in all Freeport tax sites from April 2022 or when a tax site is designated if after this date. This would be available until at least April 2026 with the intention to extend for up to a further five years to April 2031, subject to a review of the relief.
By Ian Pring, Tax Partner