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Investment Zones and Freeports: A boost for FDI and business growth

The recent announcement by the UK government regarding the extension of investment zone and freeport tax reliefs brings with it immense potential for businesses to thrive and seize new opportunities. 

When the investment zone initiative was unveiled in the Spring Budget 2023, it set forth a vision of establishing twelve zones within the UK, with four located outside of England. Notably, the government has now increased its support for investment zones in England, providing £160m of assistance over a ten-year period. This support can be utilised flexibly, allowing businesses to take advantage of spending opportunities and tax incentives. These incentives include enhanced capital allowances, stamp duty land tax relief, and 100% business rates relief.

Recognising the need for a coordinated approach, the UK government is committed to working closely with the Scottish and Welsh governments to extend investment zones and freeports to Scotland and Wales respectively. It’s worth noting that the Scottish freeports, which are part of this initiative, have an ESG (Environmental, Social, and Governance) angle to them. This highlights the importance of ESG and sustainable-led investment, which is something that we covered in our own FDI report. Furthermore, ongoing dialogue with stakeholders in Northern Ireland underscores the government's dedication to supporting investment opportunities there also.

In addition to the extended tax reliefs, the government has recently launched the third investment zone in England, located in West Yorkshire. This zone is strategically positioned around the region's universities in Huddersfield, Bradford, and Leeds, as well as the thriving cluster of life sciences businesses in the area. The government predicts that this investment zone alone has the potential to create over 2,500 new jobs within the region over the next five years, with an estimated £220m of private sector investment. It is a testament to the government's commitment to fostering innovation and driving growth in various sectors.

Here at Irwin Mitchell, we endorse these government initiatives. We firmly believe that freeports, including the Scottish freeports with their ESG focus, serve as a powerful catalyst for increased foreign direct investment (FDI).

The benefits of FDI into the UK and its businesses are evident. Additional funding empowers businesses to expand, creating more job opportunities. Moreover, access to knowledge, skills, and cutting-edge innovation propels businesses towards achieving their growth objectives.

The government's announcement regarding investment zone and freeport tax reliefs presents an exceptional opportunity for businesses to flourish, contributing to the overall economic prosperity of the nation.

How we can help

Irwin Mitchell’s international team offers advice and representation for overseas businesses that are active in the UK market, and those that want to be. It recently published a new report about foreign direct investment into the UK which looks at which countries are investing the most in the UK, which sectors are most attractive, and where the UK hotspots are currently. Download the report here