Just last week the UK Government announced eight new freeports in and around England, mainly close to shipping ports and airports.
It is hoped that these freeport areas will unleash billions of pounds of investment, additional trade and more jobs. Whilst the freeports were only announced in England, it is understood that freeports will be announced in Scotland, Wales and Northern Ireland in the coming months.
Businesses who are located within the freeports will be offered tax incentives including no stamp duty, and full rebates for construction and machinery investment. In addition businesses will be offered five years of zero business rates, and lower tariffs and customs obligations. Industrial hubs will be generated in these freeport zones due to the cost efficiencies on offer.
The UK had freeports in existence up until 2012 but without much success, it is expected that with the announcement of these new free port areas, which is on a much larger scale than previously seen that the impact will be far more significant this time round.
Why have freeports, what are the benefits?
The short answer is, that freeports allows businesses involved in importing and exporting to take advantage of having their products imported or exported into the freeport zone without paying any tax or duty. Plus there will be the added benefit of a much reduced administration process when it comes to importing and exporting, and cash flow improvements for businesses as well.
Should the goods leave the freeport zone and be transported to other locations within the UK, then the goods will be subject to custom and duty charges. Otherwise if they are exported out of the UK no charges will be paid within the UK, however the goods could be subject to charges at the export destination.
These new freeports being announced and huge trade deals in discussion between the UK and Australia, USA and India for example, could prove to be a huge success for the UK.
WTA UK Managing Director, Thomas Kuehn commented that:
"I can see great advantages for UK companies and foreign investors to have their products at a UK freeport on EU shores. I believe that some companies will move their entire company to a freeport area, as I believe that the government will entice this by offering some great incentives. Other companies would just move their stock into the freeports to take advantage of the savings in duty/tax and also cashflow."
Where are the freeports located?
- East Midlands Airport
- Freeport East which incorporates Felixstowe and Harwich
- Humber region including Hull, Grimsby, Immingham and Goole
- Liverpool City Region
- Plymouth and South Devon
- Solent - including Southampton and Portsmouth
- Thames - including London Gateway and Tilbury ports
- Teesside
The government says the new freeports will begin operations from late 2021.
For more information on how the freeport areas could be of benefit to your business please contact Jade Blackburn.
