Andrew Rowe, partner at Azets in the North-East, the UK’s largest regional accountancy and business advisors to SMEs, comments on the Teesside freeport announcement and significant investment into the region.
The news in the chancellor’s Budget that Teesside has been selected as one of eight freeports in England is fantastic for the region. The site, which covers 4,500 acres, is the largest of its kind in the UK.
It’s anticipated that it will create 18,000 skilled, good-quality jobs within five years, boost the local economy by £3.4bn and support offshore wind, clean energy, chemicals and process and advanced manufacturing sectors.
The freeport proposal and the news that Treasury North will be located in Darlington are big wins for the region and bring global focus on this great industrial heartland. They put the region on the map, both nationally and globally.
Earlier this month, GE also announced that it will be building its turbine blade factory on Teesside, creating more jobs as it develops the next generation of offshore wind projects on the banks of the Tees.
As a proud Teessider, this is monumental for the area and will have a massive knock-on effect on skills, expertise and job prospects for the next generation and boost further investment into the region.
What are freeports?
Freeports are designated customs-controlled areas where businesses can import and temporarily house goods within the country’s border, without having to pay the associated import duties and with limited customs paperwork having to be presented. This cuts down costs for businesses and can help with cash flow.
Within a freeport zone, work can be carried out on goods and raw materials by businesses, which at the same time benefit from duty and VAT reliefs.
As a result of the Teesside freeport status, businesses will benefit from reductions in customs duties and VAT, which will help stimulate both the local and wider regional economies. The freeport could also provide solutions to EU-UK distribution problems and improve the UK’s trading position post-Brexit. However, further detail is needed on how it will work in practice, the levels of support that will be available and which types of businesses will benefit.
The announcement of the Teesside freeport coupled with the super deduction allowance of 130 per cent will make the freeport areas more attractive for inward investment. This will provide strong short-term tax relief for inward investors to set up in Teesside. This in turn may provide additional international jobs to freeport areas of the UK.
What are the benefits to businesses being based at a freeport?
The government intends to create “tax sites” within the freeports that will allow businesses to benefit from tax reliefs such as:
> An enhanced 10 per cent rate of Structures and Buildings Allowance for constructing or renovating nonresidential structures and buildings within the freeport
> An enhanced capital allowance of 100 per cent for companies investing in plant and machinery for use in the freeport
> Full relief from Stamp Duty Land Tax on the purchase of land or property within the tax sites
> Full Business Rates relief in freeport tax sites
> Depending on the detail, the use of a UK freeport may provide a potential solution to the EU-UK distribution challenges resulting from the EU-UK Trade and Cooperation Agreement.
There would clearly be a cost to businesses that opted to set up or move their existing operations to a freeport. A cost-versus-direct benefit analysis would need to be considered by any business looking at freeports as a supply chain option.
Azets can support businesses on all aspects of their freeport strategy. Its services include accounting, tax, auditing, corporate finance and technology solutions and are specifically tailored for the needs of each client, including SMEs and corporates, from start-ups to international groups.
For further information, please contact Andrew Rowe at email@example.com, or visit azets.co.uk.