Investment zones were refocused at the Spring Budget 2023. They are intended to grow the economy by focusing on places with significant unmet productivity potential and building on their existing strengths. How do they compare to freeports?
Investment zones were initially announced in the “mini-budget” in 2023 as a means to incentivise growth and investment in specific parts of the UK. Following the announcement at the Autumn Statement 2022 that the initial expressions of interest would not be taken forward, a refocused policy to use investment zones to catalyse 12 high-potential knowledge-intensive growth clusters across the UK was announced at Spring Budget 2023.
The direct tax benefits of freeports and investment zones are broadly identical, subject to any differences for devolved taxes.
In particular, the term “freeport tax site” has been replaced in legislation with “special tax site”. Both freeport and investment zones can have up to three special tax sites with a total maximum size of 600 hectares.
There are, however, some differences between investment zones and freeports to be aware of:
Located at sea ports and airports where goods arrive in and depart from the UK. The special tax sites associated with freeports are discrete areas close to the port itself (eg, industrial estates).
The eight freeport areas in England are:
The two green freeport areas in Scotland are:
The two freeport areas in Wales are:
No freeports have been announced to date for Northern Ireland.
All zones will be centred around a University or local research institution and the tax sites will be located with the aim of developing brownfield sites. They are based in eight English locations and four located elsewhere in the UK with high growth potential.
The following eight broad English areas were specified in the 2023 Spring Budget:
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