New investment zones within the UK

The Government is in discussion with 38 local authority areas in England to set up ‘Investment Zones’ in specific sites within their area.

What will the government offer to the new investment zones?

Each of the Investment Zones (IZ) will offer generous, targeted and time limited tax cuts for businesses along with liberalised planning rules to release more land for housing and commercial development.

These will be hubs for growth, encouraging investment in new shopping centres, restaurants, apartments and offices, and creating thriving new communities. The tax incentives under consideration are:

1. 100% Business Rates Relief– on newly occupied or expanded business premises in IZs.
2. 100% first year allowance – for companies with qualifying expenditure on assets for use in IZs
3. Enhanced Structures and Buildings Allowance– to allow businesses to reduce their taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of their cost of investment over 5 years
4. Zero-rate employer NIC – on salaries of any new employee working in the IZ for at least 60% of their time, on earnings up to £50,270 per year, with Employer NICs being charged at the usual rate above this level.
5. Full Stamp Duty Land Tax (SDLT) relief – for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for residential developers.

A list of the 38 local authorities taking part in discussions can be viewed in this factsheet – www.gov.uk/government/publications/the-growth-plan-2022-factsheet-on-investment-zones.

Encouraging investment in unlisted companies 

The new Chancellor has given his support to the tax-advantaged Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) and said he sees the value of extending them in the future.

The vision is for the UK to be an entrepreneurial, share-owning democracy.

In relation to the Seed Enterprise Investment Scheme (SEIS), the Treasury have confirmed that they are widening the criteria and will be allowing companies to raise £250,000 under the scheme, 66% more funding than previously.

The SEIS currently provides unconnected investors with an income tax deduction of 50% of the amount invested, up to £100,000 a year. There is also generous capital gains tax relief for the investor.

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