Budget 2021: Freeports
Freeports usher in a new dawn for the UK to regenerate as a global exporting power.
A welcome announcement in the Budget was to approve eight new Freeports in England in regeneration regions. Although Freeports will benefit the whole of the UK, businesses in these areas will particularly gain from more generous tax reliefs, simplified customs procedures and wider government support, bringing with it investment, trade and jobs.
What is a Freeport?
Freeports are an approved port (air or sea) where normal tax and customs rules do not apply. On receipt at a freeport, imports can enter with simplified customs documentation and without paying customs tariffs.
Usually, a freeport is designed specifically to encourage companies in high-tariff jurisdictions, that import, process and then re-export goods, rather than more general business support or regeneration objectives.
Where will the Freeports be?
The following areas were announced as sites for the first eight UK Freeports:
- East Midlands Airport
- Felixstowe and Harwich (Freeport East)
- Liverpool City Region
- Plymouth and South Devon
It is expected that these Freeports will begin operations from late 2021. The intention is to have Freeports in Wales, Scotland and Northern Ireland and these locations will be announced in the near future.
What are the benefits for businesses?
One of the benefits of operating within a Freeport is that a company can store goods without the need for a customs warehouse authorisation. This reduces costs and administrative burden but would likely require links to the Freeport’s inventory system.
This is where the addition of a Tax Site within the Freeport creates other attractive benefits which will allow businesses to benefit from:
If you have any queries about any of the above please get in touch with a member of our tax team on 01903 234094.