Editor in Chief AccountingWEB
In association with
Share this content
Budget 2021 economic stimulus package

Freeports lead Budget stimulus parade


​The Chancellor named eight designated trading areas that would enjoy tax breaks until 2026 as part of a Budget giveaway designed to stimulate the UK's flagging economy.

3rd Mar 2021
Editor in Chief AccountingWEB
In association with
Share this content

Eight freeports were unveiled in the 2021 budget, to be located at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool, Plymouth and South Devon, Solent, Teesside and Thames.

Described by the Chancellor as “special economic zones with different rules to make it easier and cheaper to do business”, the new UK would enjoy simpler planning jurisdictions, infrastructure funding to improve transport links and a range of tax breaks.

The concessions would include favourable trading tariffs and VAT rates, with additional tax breaks to encourage construction, private investment and job creation, the Chancellor said. 

Section 2.115 of the Budget Red Book offered more detail these regimes:

  • An 10% structures and buildings allowance for corporation tax and income to encourage construction or renovation of non-residential properties within the freeport areas. The allowance will be available for corporation tax and income tax purposes on properties taht are brought into use on or before 30 September 2026.

  • A 100% capital allowance of 100% for companies investing in plant in freeport zones. This will apply to both main and special rate assets, allowing firms to reduce their taxable profits by the full cost of the qualifying investment in the year it is made. The enhanced allowance will remain available until 30 September 2026.

  • Full relief from stamp duty until 30 September 2026 on property purchases within freeport tax sites in England. The land or property must be acquired for a qualifying commercial purpose. 

  • The business rates holiday won’t end until 2026 for new businesses that set up in the freeport areas before 30 September 2026. The rates relief will apply for five years from the date it is first claimed. 

  • The government also plans to offer relief on employers’ national insurance contributions within freeport zones from April 2022. Subject to review, the NIC relief could last until April 2031.

Before Covid-19 struck and he nailed his colours to the Eat Out to Help Out mast, freeports were Chancellor Rishi Sunak’s signature policy. The need for extra economic investment has given him a springboard to move forward with his freeport plans.

The plan got a favourable reception from Lucy Sutcliffe, head of customs at Azets, but she added: “Further detail is needed on how it will work in practice, the levels of support that will be available and which types of businesses will benefit.”

On the other side of the fence, tax justice campaigner Richard Murphy takes a particularly dim view of Sunak’s tax-busting innovation: “The history of freeports around the world is of tax abuse and crime,” he tweeted. “Why do we want to buy into that in the UK?”

PW budget banner

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.