As of December 2017 there are 48 Enterprise Zones (EZ) in the UK

An EZ aims to attract new business to its area by offering a package of measures from capital allowances and business rate relief to planning relaxations.

What's new?

  • Twelve new EZs came online during 2017.
  • There have also been a number of extensions to existing EZs.
  • ECAs are available for eight years following the establishment of new EZ.

Enhanced capital allowances (ECA)

  • A first year allowance which provides 100% tax relief.
  • Relief given for investment in new plant and machinery for use in designated assisted areas within EZ.
  • Investment limit is €125 million.
  • Available for UK resident trading companies from 1 April 2012 to 31 March 2020.
  • From 15 September 2016, ECAs are available for eight years following the establishment of new EZ.

Business rate relief

  • Available for businesses that move into an EZ before April 2018.
  • Businesses receive a business rate discount of up to 100% over a five year period.

Excepted businesses

Unincorporated businesses, including partnerships with corporate partners, are not eligible for special relief in EZs.

Certain sectors are excluded, and expenditure does not qualify for allowances if it relates to

  • Fisheries and aquaculture sectors
  • Transport sector or related infrastructure
  • Management of waste of undertakings
  • Coal, steel or shipbuilding
  • Synthetic fibres sector
  • Energy generation, distribution or infrastructure
  • Development of broadband networks
  • Primary production of agricultural products, including farm activities preparing a plant or animal for the first sale.

Qualifying expenditure

To qualify for enhanced capital allowances, expenditure must

  • Be on plant or machinery that is unused and not second-hand.
  • Comprise investment and not replacement expenditure.
  • Not relate to excluded sectors above.
  • Not be taken into account for the purposes of another State aid grant or relevant payment made towards that expenditure.
  • Not exceed a total of €125 million for the investment project.

Small print and links

Enterprise Zones were originally introduced in 2012; the time limits reliefs were extended in Budget 2014.

Legislation relating to Enterprise Zones and capital allowances is CAA 2001 s45K – s45N.

Finance Act 2016 amends CAA 2001 s45K so that ECAs are available for 8 years following establishment of EZ.

Information about Enterprise Zones can be found on the government website, www.enterprisezones.communities.gov.uk 

HMRC’s website has a series of maps showing the locations of Enterprise Zones at www.gov.uk/government/publications/enterprise-zones

Updates

19 September 2016 Updated following Royal Assent of Finance Act 2016.

27 July 2016 Update for new zones which have gone live and are expected.

21 March 2016 Update following Budget 2016 announcements.