The government has 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.
What is a Freeport tax site?
Freeports are usually located around shipping ports, or airports.
Goods that arrive into freeports from abroad are exempt from tax charges, called tariffs, that are normally paid to the government.
These taxes are only paid if the goods leave the freeport and are moved elsewhere in the UK. Otherwise, they are sent overseas without the charges being paid.
The 8 new 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.
What reliefs are available?
In Great Britain (England, Scotland and Wales), employers with physical premises in a Freeport tax site (Freeport employers) will be granted a zero rate of secondary Class 1 National Insurance contributions.
This rate will apply to 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.
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.
These include;
An enhanced 10% rate of structures and buildings allowance for constructing or renovating non-residential structures and buildings within freeport tax sites in Great Britain.
This relieves construction costs for new structures and buildings used for qualifying purposes. This supports business investment in constructing new structures and buildings and the improvement of existing ones.
It means investments will be fully relieved after 10 years compared with 33 years for properties in other locations which only achieve a 3% rate.
An enhanced capital allowance of 100% for company investment in plant and machinery for use in freeport tax sites in Great Britain.
Full relief from stamp duty land tax (SDLT) on the purchase of land or property within freeport tax sites in England where it is purchased and used for a qualifying commercial purpose.
Full business rates relief available to all new businesses and certain existing businesses that have expanded.
For more information on reliefs available within freeport areas, please contact us on 01482 888820.