Investment Zones

13 September 2023 / Insight posted in Article

Investment Zones were initially floated by the former Chancellor of the Exchequer, Kwasi Kwarteng, as part of his September 2022 Growth Plan.

Despite some subsequent political upheaval, the current Chancellor, Jeremy Hunt, confirmed in March 2023 that the government intended to introduce twelve such Investment Zones, with the aim of focusing certain tax and other incentives on high-potential industry sectors in regions in need of levelling-up.

The first two Investment Zones were announced in July 2023 as South Yorkshire, which will be focussed on advanced manufacturing, and the Liverpool City Region, which will be focussed on life sciences.

The Investment Zones

In total, there are due to be a total of eight Investment Zones in England. In addition to the two already announced, there will be further zones located in each of the East Midlands, Greater Manchester, the North East, Tees Valley, the West Midlands, and West Yorkshire.

Of the four remaining Investment Zones, at least one will be located in each of Scotland, Wales, and Northern Ireland.

In total, five specific industry sectors are intended to be the focus of particular Investment Zones, with these sectors being digital and tech, life sciences, creative industries, green industries, and advanced manufacturing.

The incentives

Each Investment Zone will be able to benefit from up to £80 million of tax and non-tax incentives over a period of five years, with each zone having flexibility to design and adopt a particular package of incentives.

Available non-tax incentives include research and development grants, infrastructure funding, skills funding, and other local enterprise and business support.

Tax incentives can be made available within designated tax sites of up to 600 hectares in each of the zones, and can be taken from the following list:

  • 100% relief from stamp duty land tax (SDLT) for property acquired for commercial use or for development for commercial use.
  • 100% relief from business rates on newly occupied commercial premises, and for certain existing businesses that expand into a designated tax site.
  • A 100% first-year allowance on expenditure on plant and machinery for use in the designated tax site.
  • An enhanced 10% structures and building allowance rate (as opposed to the standard 3%) on the costs of commercial structures and buildings.
  • A zero rate of employer’s NICs on earnings up to £25,000 per annum for new employees working in a designated tax site for at least 60% of their working time, for a period of three years per employee.

The information set out above provides a brief summary of the government’s investment zones policy. If you have any questions or wish to discuss any points in more detail, then please contact us at Moore Kingston Smith.

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