Tax breaks for locating your business in a freeport area

HMRC have published detailed maps setting out the precise location of all 8 Freeport tax and customs sites in England with the latest update at the end of August. The original 8 locations were announced in the Spring 2021 Budget:

●       East (Felixstowe and Harwich)

●       East Midlands Airport

●       Humber

●       Liverpool City

●       Plymouth and South Devon

●       Solent

●       Teeside

●       Thames

More maps of Freeports customs sites and Freeport tax sites will be added after they are designated.

Businesses in these designated areas will be able to benefit from generous tax and customs duty reliefs including:

●        An enhanced 10% rate of structures and buildings allowance.

●        An enhanced capital allowance of 100% for plant and machinery.

●        Full relief from Stamp Duty Land Tax.

●        Business rates relief.

●        Relief from employer National Insurance contributions where employees spend at least 60% of their time working in the designated area.

Businesses operating in the designated areas will be able to import goods into the Freeport customs sites with simplified customs documentation and they can also delay paying tariffs. Manufacturing businesses may then manufacture goods using these imports, before exporting them again using the simplified customs procedures without paying the tariffs.

For detailed maps see: Maps of Freeports, Freeport customs sites and Freeport tax sites - GOV.UK (www.gov.uk)

Are you planning to use a Freeport to import or export your goods?

In the Spring 2021 Budget the Chancellor announced a number of areas to be designated as Freeports. Those areas would have a number of direct and indirect tax advantages for businesses located there.

Among those advantages is relief from customs duty and the ability to make simplified declarations. HMRC have now published guidance for businesses planning to take advantage of the new procedures.

Freeport customs sites (also known as a ‘free zone’) are secure customs zones where you can import or export goods inside the UK’s land border, but where special import or export rules apply.

If you choose to use a customs site to import or export goods, you may be able to:

• get relief from duties and import taxes
• use simplified declarations processes to reduce administrative burdens
• choose which rate of Customs Duty you use if processing the goods changes their classification

If your goods are purchased in the UK, you will continue to pay duties and import taxes using the normal UK rates.

If you are a business who wants to move goods into or out of a Freeport customs site, you will need to apply to use the Freeport customs special procedure (a single authorisation combined with easier declaration requirements) to import goods that are not controlled.

For more details see: Get your business ready to use a Freeport customs site - GOV.UK (https://www.gov.uk/guidance/get-your-business-ready-to-use-a-freeport-customs-site)

21st May 2021 – Hillmans Weekly Update

Below I have summarised all the main tax related updates we have seen this week.

• ONS confirms economy growing
• Employers’ NICs Relief for employees working in Freeport tax areas
• HMRC urge businesses to carry out due diligence into their labour supply chain
• Paying CJRS Grants Back

If you have any queries about this week’s content, or if you need any assistance please do not hesitate to contact me.

I hope you have a good weekend.

Stay safe and well.

Cheers,

Steve

Steven Hillman BSc (Hons) ACA
Chartered Accountant
Tel: 01934 444100

Employers’ NICs Relief for employees working in Freeport tax areas

The government have announced a new zero rate of secondary Class 1 National Insurance contributions (NICs) for eligible employers on the earnings of eligible employees working in a Freeport tax site.

In Great Britain (England, Scotland and Wales), this measure will provide those employers with physical premises in a Freeport tax site (Freeport employers) with a zero rate of secondary Class 1 National Insurance contributions on the earnings of new employees who spend 60% or more of their working time within Freeport tax site. This rate can be applied on the earnings of all new hires up to £25,000 per annum from 6 April 2022 for 36 months per employee. Legislation to introduce the relief is included in the National Insurance Contributions Bill 2021.

This measure is in addition to the tax breaks and Customs Duty exemptions announced in the March Budget for businesses operating in these designated areas.

The first 8 Freeports announced in the Budget are located at East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth and South Devon, Solent, Teesside and Thames.

See: Zero-rate of secondary NICs for Freeport employees - https://www.gov.uk/government/publications/zero-rate-of-secondary-national-insurance-contributions-for-freeport-employees/zero-rate-of-secondary-nics-for-freeport-employees