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Businesses have ‘a decade to drive growth’ with East Midlands Freeport and investment zones

| Graeme Hills | 12 June 2024

Aiming to create 28,000 jobs for the region and having already secured £175 million of private investment, the now fully operational East Midlands Freeport offers a valuable opportunity for businesses in our region.

It is part of the nationwide plan to ‘level up’ UK cities which are currently outperformed by our European counterparts. It is intended to increase economic growth and encourage regeneration - but has faced criticism in a special report stressing the need for ‘urgent’ improvements’ for these sites to be viable long-term.

One key concern raised was the long-term political commitment from the government to support these investment zones. As a direct result, the government has announced that freeports in the UK will continue to benefit from tax relief allowances until 30 September 2031, whereas special investment zones have until 30 September 2034.

This extension is great news for businesses as it gives them ample opportunity to better plan and prepare now that there is clear certainty around the longevity of the East Midlands Freeport and investment zones.

But what exactly is it? How does it work? And how can businesses benefit?

Freeports and investment zones explained

A freeport is an area designated by the government designed to drive regeneration and increase trade and social mobility by offering exclusive tax reliefs.

These include:

  • Enhanced structures and buildings allowances, meaning that businesses can claim back up to 10% of the cost of constructing new buildings or adapting existing premises to make them fit for purpose in the freeport site;
  • Up to 100% enhanced capital allowances for plant and machinery, meaning that businesses can buy or sell assets without incurring any additional tax liability;
  • National Insurance contributions relief of up to £75,000 for new employees - this applies to employees that are likely to spend 60% or more of their time on at least one freeport site - easing employer’s tax contributions during the payroll process;
  • And Stamp Duty Land Tax relief if businesses are purchasing land or premises on the Freeport site - this also applies to businesses that are extending a lease or paying rental payments on an existing lease on the Freeport site - similar reliefs are available to businesses in the East Midlands investment zone; check if you are eligible to claim such reliefs here.

Similarly, special investment zones across the region also offer £160 million over 10 years to attract investment, kickstart innovation and amplify the creation of jobs. Businesses can unlock these funds by accessing one of five schemes: skills, research and innovation, business and stakeholder support, local infrastructure, and planning

Three opportunities to ‘level up’ economic growth

The East Midlands Freeport consists of three sites: the East Midlands Airport and Gateway Cluster (EMAGIC), the UK’s largest freight airport; the East Midlands Intermodal Park (EMIP) - a ‘next-generation’ rail-connected business park; and the Ratcliffe-on-Soar power station, which offers high-capacity utility infrastructure for businesses.

This is good news for the East Midlands Freeport, especially in light of a newly forged partnership with the East Midlands Chamber which aims to ensure that £1bn of business rates are retained to be spent locally.

Logistics and manufacturing to benefit from freeports

The announced extension effectively gives businesses a further decade to drive growth by benefitting from the tax reliefs a freeport and investment zone created during this period. This is especially relevant to businesses in the shipping, logistics, manufacturing, real estate and construction industries.

For example, there is a new c.70,000 sq ft plot available at the East Midlands Freeport alongside Amazon, GXO, DHL, Very, and Games Workshop - which would be ideal for several logistics companies in our region.

However, let’s not lose sight of the fact that freeports and investment zones account for only one-thousandth of the UK’s spend on economic affairs. So, while continued support in these areas is encouraging, targeted financial aid for SMEs would go a long way towards increasing consumer confidence and uplifting the local economy as the UK reluctantly pulls itself out of a recession.

To explore the financial and operational options that could benefit your business, download your free Freeport Induction Pack from HMRC or get in touch with our expert team today.

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