In line with the government the previous announcement in 2022, 12 Investment Zones were confirmed, and in the Autumn Statement 2023, the period of relief doubled from 5 to 10 years. These investment zones are offering tax reliefs and other flexible grants to support digital/technology, life sciences, creative industries, green industries and advanced manufacturing.
Where will they be located?
The Investment Zones tax offer will be carefully designed to encourage investment and new economic activity, supporting growth and jobs.
At the 2023 Spring Budget, the Government announced it would invite local partners within the following Combined Authorities to begin discussions on hosting an Investment Zone:
- East Midlands
- Greater Manchester
- Liverpool City Region
- North East
- South Yorkshire
- Tees Valley
- West Midlands
- West Yorkshire
The government also said that it would engage with the devolved administrations in Scotland, Wales and Northern Ireland to establish at least one new Investment Zone in each location, with Glasgow City Region and the North East of Scotland (Aberdeen) subsequently selected to host Scotland’s Investment Zones. Specific locations within these areas are yet to be confirmed.
The incentives available align with those already available in Freeports:
Employer National Insurance Contributions (“NICs”) threshold raised from £9,100 (2023/24) to £25,000 in respect of new employees, saving up to £2,200 per eligible employee per year;
Employers in Great Britain will claim in real-time through RTI using the new NI table letters N, E, K and D. The applicable rules are below:
- The employee must be a new hire whose employment starts on or after 6 April 2022 and before the applicable sunset date
- The employee cannot have worked for that employer (or an employer connected to the employer) in the previous 24 months
- The employee will spend a minimum of 60% of their working time in the Investment Zone tax site
- Claim will expire 36 months from the employee’s start date
- The are no limits to the number of employees
- Feepayers can claim for IR35 based calculations
100% business rates relief on newly occupied and expanded premises. Local authorities hosting Investment Zones will receive 100% of the business rates growth above an agreed baseline in designated sites for 25 years.
Full stamp duty land tax relief on land bought for commercial or residential development.
100% first year enhanced capital allowance relief for plant and machinery used within designated sites.
What should I be doing now?
Businesses should monitor the implementation and development of Investment Zones, including the proposed sites, to evaluate them as an option when planning future investments.
