The Chancellor announced the following measures on Investment Zones in his Spring 2023 Budget.
From Royal Assent of Spring Finance Bill 2023, special tax sites in or connected with Investment Zones will now be able to benefit from a package of tax reliefs including:
- Stamp Duty Land Tax (SDLT) relief.
- Enhanced capital allowances of 100% for plant and machinery.
- Enhanced structures and buildings allowances.
- Relief from secondary Class 1 National Insurance contributions (Employer NICs) for eligible employers on the earnings of eligible employees up to £25,000 per annum.
- Relief from Business rates.
This takes a proposal announced in the September 2022 mini-budget and put on hold by the current Chancellor in his 2022 Autumn Statement and provides more details on the planned reliefs which closely mirror those available to businesses operating in freeport sites and are intended to operate over a five year period.
The first eight investment zone sites, out of a planned total of twelve, are to be:
- The proposed East Midlands Mayoral Combined County Authority
- Greater Manchester Mayoral Combined Authority
- Liverpool City Region Mayoral Combined Authority
- The proposed North East Mayoral Combined Authority
- South Yorkshire Mayoral Combined Authority
- Tees Valley Mayoral Combined Authority
- West Midlands Mayoral Combined Authority
- West Yorkshire Mayoral Combined Authority
Full relief will be available for purchases of land or buildings which are:
- Acquired for qualifying commercial purposes which includes development for commercial use.
- Used for such purposes in a control period of up to three years.
- A 100% first-year (enhanced) Capital Allowance for companies’ qualifying expenditure on plant and machinery assets for use in tax sites.
- A 10% enhanced Structures and Buildings Allowance on the cost of qualifying non-residential investment means businesses can obtain 100% relief for the cost of their structures and buildings over a 10-year period.
- 100% relief from business rates on newly occupied business premises and certain existing businesses where they expand in Investment Zone tax sites.
- A zero-rate of Employer NICs on salaries of any new employee who work on the tax site:
- For at least 60% of their time.
- On earnings up to £25,000 per year with Employer NICs being charged at the usual rate above this level.
- For a period of 36 months per employee.
Useful guides on this topic
Budget 2023: At a glance
Freeview summary of the measures announced in the Budget 2023.
Policy paper: Investment Zone special tax sites