Government hopes new Freeports will boost post-transition trade
9 October 2020: HM Treasury has outlined plans to create modern Freeports across the UK to create new jobs and investment opportunities and help to regenerate communities.
Following consultation, the Treasury has announced more detail on its Freeports plan, an important part of the Government’s strategy for boosting post-Brexit economic growth.
Freeports will provide secure customs zones based around ports, inside which business can be carried out inside a country’s land border, but where different customs rules apply. They will be used to:
- reduce administrative burdens and tariff controls;
- provide relief from duties and import taxes; and
- ease tax and planning regulations.
Usually, there is no duty due on goods when they arrive at the Freeport. If the goods are re-exported without entering the domestic market, they remain duty-free. If raw materials are brought into a Freeport from overseas and then processed before moving into the domestic market, then duties are paid on the final goods.
Freeports may also offer simplifications from the normal customs administrative processes on imported goods as well as tax incentives.
According to a government statement, the UK’s new Freeport policy is based on an “ambitious” new customs model “drawing on international best practice” and it aims to improve on the UK’s existing customs arrangements and previous Freeports.
The Government intends this new customs model to benefit from:
- streamlined planning processes to aid brownfield redevelopment;
- a package of tax reliefs to help drive jobs, growth and innovation; and
- simplified customs procedures and duty suspensions on goods.
The aim is to launch at least one Freeport in each UK nation, with sea, air and rail ports in England invited to bid for Freeport status before the end of this year. The government plans to open the first site by the end of 2021.
Commenting on the plans Anita Monteith, senior technical manager at ICAEW said: “The Government is proposing a relief from employers’ National Insurance Contributions to businesses located in these Freeport tax sites. This has the potential to boost employment, but while a welcome cost saving for business, it comes with the potential for administrative difficulties. We look forward to further discussion on how these can be avoided.”
Find a range of resources to help you prepare for future trade with the UK during the post-Brexit transition period and beyond by visiting ICAEW’s Brexit Hub.