Freeports represent a major opportunity for regions of the UK to develop their economies and attract new investment.
On the 16th November 2020, the Government launched its Prospectus and competitive bidding process for Freeports. Freeports are a flagship government programme that will play an important part in the UK’s post-Covid economic recovery and contribute to realising the levelling up agenda, bringing jobs, investment and prosperity to some of our most deprived communities across the four nations of the UK with targeted and effective support.
The UK government has committed to establishing Freeports in each of the four nations, with the aim of around 10 Freeports across the UK.
In the Humber region, Associated British Ports (“ABP”) is working closely with the local authorities and the Local Enterprise Partnerships (“the Promoters”) that cover the geographic region of the Humber Estuary to coordinate a bid for a Humber Freeport. The Promoters intend to submit a bid by the Government’s deadline of 5th February 2021. The shortlisted proposals are expected to be confirmed by Spring 2021, following which there will be a period of finalising the details of the Freeport with Government through a Business Case process.
A Freeport will consist of a broad geographic region encompassing different types of facility that may benefit from the measures set out by the Government. Principally, parcels of land may be designated as either Customs Zones or Tax sites.
Customs Zones and Tax Sites
The Bidding Prospectus sets out the detail of the benefits available to business within Customs Zones and Tax Sites together with the requirements that a business/ site would be required to meet if selected. Both Customs Zone and Tax Sites do not have to be adjacent to port facilities or within existing port estates, however, any sites put forward require a clear economic rationale and justification against the government’s policy criteria.
Principally, Customs Zone operators are required to be authorized by HMRC and Borderforce and meet their own costs of achieving such status.
Businesses within designated Tax Sites may benefit from business rate and stamp duty land tax relief, capital allowance acceleration and an employers’ national insurance holiday. The maximum number of Tax Sites designated within a freeport is limited to three and the total area of land is limited to 600Ha. As such, the Government is expecting sites to be of between 20 and 200Ha. The Government’s Prospectus outlines a number of other criteria, including that the sites must be viable, “underdeveloped” and delivered as soon as possible between 2021 and 2026. Please note that the land within a tax site can be under multiple parties’ ownership.