COMMENT
Horizon - the Wilton International site ( foreground ) and old steelworks site are both part of the new Teesside freeport .
How freeport and investment spells opportunity for Teesside
A NEW DAWN
Andrew Rowe , partner at Azets in the North-East , the UK ’ s largest regional accountancy and business advisors to SMEs , comments on the Teesside freeport announcement and significant investment into the region .
The news in the chancellor ’ s Budget earlier this month that Teesside has been selected as one of eight freeports in England is fantastic for the region . The site , which covers 4,500 acres , is the largest of its kind in the UK . It ’ s anticipated that it will create 18,000 skilled , good-quality jobs within five years , boost the local economy by £ 3.4bn and support offshore wind , clean energy , chemicals and process and advanced manufacturing sectors .
The freeport proposal and the news that Treasury North will be located in Darlington are big wins for the region and bring global focus on this great industrial heartland . They put the region on the map , both nationally and globally .
Earlier this month , GE also announced that it will be building its turbine blade factory on Teesside , creating more jobs as it develops the next generation of offshore wind projects on the banks of the Tees . As a proud Teessider , this is monumental for the area and will have a massive knock-on effect on skills , expertise and job prospects for the next generation and boost further investment into the region .
What are freeports ? Freeports are designated customscontrolled areas where businesses can import and temporarily house goods within the country ’ s border , without having to pay the associated import duties and with limited customs paperwork having to be presented . This cuts down costs for businesses and can help with cash flow . Within a freeport zone , work can be carried out on goods and raw materials by businesses , which at the same time benefit from duty and VAT reliefs .
As a result of the Teesside freeport status , businesses will benefit from reductions in customs duties and VAT , which will help stimulate both the local and wider regional economies . The freeport could also provide solutions to EU-UK distribution problems and improve the UK ’ s trading position post-Brexit . However , further detail is needed on how it will work in practice , the levels of support that will be available and which types of businesses will benefit .
The announcement of the Teesside freeport coupled with the super deduction allowance of 130 per cent will make the freeport areas more attractive for inward investment . This will provide strong shortterm tax relief for inward investors to set up in Teesside . This in turn may provide additional international jobs to freeport areas of the UK .
What are the benefits to businesses being based at a freeport ? The government intends to create “ tax sites ” within the freeports that will allow businesses to benefit from tax reliefs such as : > An enhanced 10 per cent rate of Structures and Buildings Allowance for constructing or renovating nonresidential structures and buildings within the freeport
> An enhanced capital allowance of 100 per cent for companies investing in plant and machinery for use in the freeport
> Full relief from Stamp Duty Land Tax on the purchase of land or property within the tax sites
> Full Business Rates relief in freeport tax sites
> Depending on the detail , the use of a UK freeport may provide a potential solution to the EU-UK distribution challenges resulting from the EU-UK Trade and Cooperation Agreement .
There would clearly be a cost to businesses that opted to set up or move their existing operations to a freeport . A cost-versus-direct benefit analysis would need to be considered by any business looking at freeports as a supply chain option .
Azets can support businesses on all aspects of their freeport strategy . Its services include accounting , tax , auditing , corporate finance and technology solutions and are specifically tailored for the needs of each client , including SMEs and corporates , from start-ups to international groups .
For further information , please contact Andrew Rowe at andrew . rowe @ azets . co . uk , or visit azets . co . uk .
48 | Tees Business