The creation of new UK Freeports will soon be a reality, handing companies that wish to conduct their business there some key incentives.

Various questions are still being asked such as what constitutes a Freeport, when can those interested parties start the bidding process, and what exact benefits will be available?

The new UK Freeports

Simply put, this will be a geographically distinct area which will have different zones within it. A new UK Freeport can be any type of port; rail, air or sea, and the entire geographically distinct area – which will have various customs and tax benefits – must be contained within what is to be termed the ‘Freeport Outer Boundary.’ This cannot exceed 45km in length.

A primary customs site will be required to be built in the outer boundary – or inland as long as it’s possible to see the relationship between port and customs site, and monitoring for HMRC and UK Border Force is effective. A tax site needs to be built within the Freeport (ie not in its Outer Boundary), and must be no larger than 600 hectares. There remains the possibility to split this into three individual tax sites of no more than 200 hectares each, but this is only on the basis that an economic case is made for the same.

Any bidders will have to justify their tax site location, which the Government stress must be ‘in an area that is undeveloped and should ideally be located in areas with below national average GDP per head and above average national unemployment.’


The Bidding Prospectus is a document that has been in the public domain for some while now. Within the document was a note for all bids to be submitted no later than 12 noon on Friday, February 5, 2021.

Government ministers will announce the successful bids in the spring of 2021 after first assessing the candidates from March 2021 onwards. By the summer of 2021, those bidders who are successful will be able to get approval for their tax and customs sites as well as receiving their funds.

Customs benefits

There’s still some small print to be ironed out with regards to what customs benefits will be available, although it is believed that duty deferral and tariffs will be included.

Simplified import procedures will be a god-send for many, as will the ability to suspend import VAT on any goods that enter the customs site.

A customs duty exemption will apply on any imported goods made into finished goods on-site before being re-exported.

Tax benefits

  • Business Rates Relief: Applicable from October 1, 2021, for 5 years from when relief is first received, which has to be before September 30, 2026, in any event. The government intends to offer up to 100% relief and this is expected to apply to new or existing businesses in a Freeport tax site.
  • Employer National Insurance Contributions (NICs) Rate Relief: Staff will be classed as an employee if 60% or more of their working hours are spent in the Freeport tax site. The idea is for all employers within the tax site to be given the opportunity of paying 0% employer NICs for up to three years per employee and for earnings up to £25,000pa. This will start from April 2022 and be available until at least 2026, however, a Government review may see this extended until 2031.
  • SDLT: Will apply from April 1, 2021 until March 3, 2026, and is for the purchase of land used for a qualifying commercial activity. Such activities are yet to be determined.
  • Enhanced Structures and Buildings Allowance (SBA): Will apply from April 1, 2021 until September 30, 2026, and is for companies to be able to reduce taxable profits by 10% on investments over 10 years rather than the current 3% over 33.3 years. This relates to construction and renovations only, and buildings must be within the Freeport tax site as well as being non-residential.
  • Enhanced Capital Allowances (ECA): Will apply from October 1, 2021 until September 30, 2026. Relates to new machinery and/or plant assets, with the intention being that the Government provides relief to offset taxable profits. This is to be done by using the full cost of the qualifying investment – but in the same tax period that the cost was incurred.

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