New opportunities for overseas companies
Are you a non-UK company thinking of setting up in the UK? Then now is the perfect time to set the ball in motion. As part of its post-Brexit plans for boosting the UK economy and creating thousands of jobs, the British government is establishing at least 7 new Freeports throughout the country – bringing the total number up to 10 or more.
What are Freeports?
Because Freeports are all about the international movement of goods, they tend to be located close to airports or shipping ports.
Their principle is simple. When goods arrive from overseas at a Freeport, they are exempt from tariffs – usually paid to the government. These tariffs only become due once the goods leave the freeport to be moved on elsewhere in the UK. If those goods are sent overseas, then there’s no tariff due.
What are the benefits of Freeports?
Now that the UK has left the EU, it enjoys greater flexibility in the support it’s allowed to give companies. For example, it can now give tax breaks to Freeport firms without needing prior agreement from the European Commission.
The intention of the UK government is that Freeports will support the regeneration of some of the more deprived areas of the country. The regulations may vary between the different nations of the UK, but in the case of England, if your non-UK company is operating in the UK, then the benefits you could enjoy by operating within Freeport areas will include –
- The opportunity for temporary tax breaks. Examples include reductions in the tax you pay on your existing property – also when you buy new properties
- (from April 1922) lower National Insurance contributions for new workers you employ
- Simplified customs procedures
- Streamlined planning processes
- A wide package of tax reliefs, including on purchasing land, constructing or renovating buildings, investing in new plant and machinery assets.
Benefits to the Freeport areas
The goal of the UK Government is to use the development of Freeports to transform currently deprived historic sea, air and rail ports into national hubs for trade, innovation and commerce. In this way, communities in the UK industrial heartlands will be re-generated – to the benefit of the individual areas as well as to the UK as a whole.
Confirming the government’s aims, The Chancellor of the Exchequer, Rishi Sunak, explains –
What kind of restrictions will apply to government subsidies?
The Brexit trade deal between the UK and the EU still demands that subsidies must be justified. Furthermore, the UK is still subject to World Trade Organization rules. These state that governments can’t introduce subsidies linked purely to export performance.
What will be expected of companies in Freeport areas?
There have been arguments that in setting up these Freeport areas, the government might be encouraging illegal money-laundering opportunities. However, the authorities have underlined their commitment to ensuring that the Freeport model maintains the UK’s high standards of:
- workers’ rights
- data protection
- the environment
Freeports will also commit to the OECD Code of Conduct for Clean Free Trade Zones and current obligations defined in the UK’s Money Laundering Regulations 2017.
The government is also determined to uphold its principles of fair and open competition between businesses.
To date, 18 areas in England are bidding for the opportunity to become a Freeport, with at least 7 expected to be successful. The UK government is hoping for a fair spread of Freeport locations across the country. They won’t simply be looking for economically deprived areas but also for locations with a strong potential for development.
Supporting non-UK businesses in the UK
Here at AccountsCo, we specialise in supporting non-UK companies to set up and operate successfully in the UK.
We give advice and guidance on UK tax, accounting procedures, company law, import regulations and numerous other services.
Our clients include UK subsidiaries of overseas companies as well as UK businesses owned by non-UK entrepreneurs.
Find out more. Get in touch, and remember – we’re here to help.
New opportunities for overseas companies Are you a non- […]