Insights

The Growth Plan: Investment Zones

Martin Dye Article author separator

23 Sept 2022

The Government will introduce ‘Investment Zones’ across the UK. Areas with Investment Zones will benefit from tax incentives, planning liberalisation, and wider support for the local economy. Ministers will relax environmental protections within the zones, for example EU directives that protect newts, toads and bats from developers, with the aim of boosting growth, jobs and house building in the selected areas.

Investment Zones will be chosen following an ‘Expression of Interest’ process and after local consent is confirmed. The Government is in early discussions with 38 English local authorities who have already expressed an initial interest.

Specified sites in England will benefit from a range of tax incentives over 10 years. The tax incentives under consideration are:

• Business rates – 100% relief from business rates on newly occupied business premises, and certain existing businesses where they expand in English Investment Zone tax sites. Councils hosting Investment Zones will receive 100% of the business rates growth in designated sites above an agreed baseline for 25 years
• Enhanced Capital Allowance – 100% first year allowance for companies’ qualifying expenditure on plant and machinery assets (including special rate) for use in tax sites
• Enhanced Structures and Buildings Allowance – accelerated relief to allow businesses to reduce their taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of their cost of investment over five years
• Employer National Insurance contributions relief – zero-rate Employer NICs on salaries of any new employee working in the tax site for at least 60% of their time, on earnings up to £50,270 per year, with Employer NICs being charged at the usual rate above this level
• Stamp Duty Land Tax – a full SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for new residential development

The 100% enhanced capital allowances for plant and machinery will still need to be considered alongside the current 130% super deduction for main rate plant and machinery which, although due to finish after 31 March 2023, is subject to an ongoing consultation regarding potential wider changes to the capital allowances regime.

Source:

The Growth Plan 2022 (publishing.service.gov.uk)

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