Freeports have a long history in the UK, with the first set up in the early 1980s. Although those initial freeports didn’t live up to initial promise, the latest incarnation of the freeport idea appears more robust.
What are the potential freeport benefits and how will freeport tax be calculated?
A new generation of UK freeports.
In 2020 the then Chancellor, Rishi Sunak, unveiled proposals to establish up to 10 freeports throughout the UK.
These would function as economic zones with their own customs regulations, tax exemptions, and planning freedoms.
The aim of the project is to attract fresh investments, generate new employment opportunities, sponsor innovation and boost economic development.
Critically, the new generation of freeports will be located in places that have fallen behind economically.
What are the benefits of freeports?
Freeport benefits are hotly debated, but it’s hoped that by reducing taxes and tariffs, companies will be able to invest, grow and develop the local economy.
By providing tax benefits for businesses operating within its boundaries, it’s hoped that investment, trade and job opportunities will follow – all of which will drive economic growth in the area.
One of the primary UK freeport tax benefits is the exemption from customs duties and tariffs on goods imported into and exported from the freeport.
Businesses operating within a freeport can import goods without paying customs duties or tariffs, provided that the goods are exported from there or used within the freeport’s boundaries.
This makes it cheaper and easier for businesses to trade internationally, thereby enhancing their competitiveness and growth prospects.
Companies will be able to import materials, use them to create products, and then export those finished goods.
Another freeport tax benefit is the ability to claim enhanced capital allowances on investments made within the freeport.
Capital allowances are a form of tax relief that enables businesses to deduct the cost of qualifying assets, such as buildings and machinery, from their taxable profits. In a freeport, businesses can claim enhanced capital allowances of up to 100 per cent on specified qualifying assets, thereby reducing their tax liability and freeing up more funds for investment and growth.
A reduced rate of National Insurance contributions for businesses that hire new employees within their boundaries will also apply. It’s hoped that this freeport benefit will encourage companies to hire more people locally, boosting employment opportunities across the region.
Companies operating inside the freeport framework will also benefit from reduced business rates, lowering their costs and the threshold for making a profit.
Grow your business with support from SSO International Forwarding
If you’re a business currently considering freeport benefits and how they may be able to assist your business to grow and develop. then SSO International Forwarding can help.
We are the first customs site operator in the new Liverpool City Region Free Port.
Our designated customs site comprises a 50,000 sq ft secure warehouse in Haydock that offers easy access to the M62 and M6, as well as Liverpool and Manchester airports and the Port of Liverpool.
Contact us to find out more about how we can help your business enjoy the benefits offered by the new freeport to grow and develop.