What are Freeports and how could they benefit business?

With the announcement this week that there are to be two new green freeports built in Scotland, Consultant, Bevis Wright takes a look at what a freeport is and how they could benefit business.

So, what is a freeport

Freeports have been around in the UK for many years; the first ones opened in the 1980s, and the current Government has planned a revival and expansion of the concept, with the aim of promoting regeneration and job creation as part of their levelling up agenda.

There’s no exact definition of a freeport, but in simple terms it is an area within the country that is effectively outside the country’s customs borders. 

What are the benefits of operating in a freeport?

The main benefits centre around that fact that materials can be imported into a freeport with simplified customs procedures, and in most cases without tariffs.  A business can then process them into a final product and then either pay a tariff on the goods sold into the UK or export the goods without paying any UK tariffs at all.

The add-on benefit is that the government is promoting a package of tax incentives for businesses located in freeports.

What are the tax incentives on offer?

There are various tax incentives in the package, including:

• Stamp Duty Land Tax (SDLT) relief - the government intends to offer SDLT relief on land purchases within Freeport tax sites
• Enhanced Structures and Buildings Allowance - additional tax deductions for firms constructing or renovating structures and buildings within Freeport sites
• Enhances Capital Allowances - there will be additional tax relief for companies investing in new plant and machinery assets
• Employer National Insurance Contributions Relief - employers operating in a Freeport site will be entitled to a 0% rate a proportion of employers NICs on salaries of new employees working in the site
• Business rates relief - the government will be offering 100% relief from business rates on certain business premises within Freeport sites.

What type of businesses will benefit from operating in a Freeport site?

Clearly, operating inside a Freeport site will be a significant advantage to businesses who are involved in significant levels of import or export activity, and particularly those who import materials into the UK and then export the finished goods.

Where are the 8 new Freeport sites?

The locations chosen are:

• East Midlands Airport
• Felixstowe and Harwich
• Humber
• Liverpool City Region
• Plymouth
• Solent
• Thames
• Teesside.

What are the next steps?

A total of 4 freeports are already up and running, with East Midlands Airport aiming to be open by end of March 2022 with the Plymouth and Liverpool ports hoping to be up and running by the summer. 

If you would like more information on how we could help you and your business, contact us at info@oldfieldadvisory.com or call 02476673160.

Please note: This article is provided for information only and was correct as at time of writing (21/02/22). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance.  No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.