Investment Zones

The measure

The government has announced that it will launch 12 Investment Zones across the UK (including four across Scotland, Wales and Northern Ireland), with the stated aim of catalysing high-potential knowledge-intensive growth clusters. Investment Zones will benefit from tax incentives alongside flexible grant funding, with government support amounting to £80 million for each Investment Zone in England over five years. 

As part of the package, the government is introducing a number of tax incentives which will be time-limited. For Investment Zones in England, these include: 

• Businesses with eligible activities operating within the proposed Investment Zones can elect to benefit from a 100% first-year allowance on qualifying plant and machinery assets for use in tax sites. In addition, an enhanced Structures and Buildings Allowance of 10% per annum on qualifying expenditure on non-residential structures and buildings (increased from the ordinary 3% rate) is available; 
• 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 £25,000 per year; 
• Full Stamp Duty Land Tax relief for land and buildings bought for use or development for commercial purposes; and 
• 100% relief from business rates on newly occupied business premises. 

Who will be affected?

The tax reliefs are aimed at businesses locating and developing in the designated areas, and the local economies of the Investment Zones. 

When will the measure come into effect?

A shortlist of eight Combined Authorities in England has been drawn up to host Investment Zones, with local partners invited to begin proposal discussions with the Department for Levelling Up, Housing and Communities, and HM Treasury. It is intended that Investment Zone proposals will be agreed by the end of 2023.