12 tax incentivised Investment Zones to be established

Reported by Harinder Soor, PartnerClaims and Incentives, KPMG

A refocused Investment Zones programme has been launched, with the goals of growing priority sectors and addressing economic disparities between regions.

The proposal is to provide targeted support to five priority sectors through access to a flexible package of support for businesses located in the planned 12 Investment Zones.

For the eight zones in England, each Investment Zone is expected to benefit from Government interventions (including tax reliefs and grant funding) worth up to £80 million over a five-year period. Legislation to give access to tax reliefs equivalent to those for Freeports will be included in Finance Bill 2023 and the Government anticipates funding will commence in 2024/25.

The Government expects to establish 12 Investment Zone across the UK. Eight Investment Zones will be located in England.

The potential locations in England have already been identified (the Mayoral Combined Authorities of East Midlands, Greater Manchester, Liverpool City Region, the North East, South Yorkshire, Tees Valley, West Midlands, and West Yorkshire) and reflect the Government’s ‘levelling up’ agenda by targeting areas which it believes have underperformed economically.

Most of the published detail regarding possible incentives relates to these zones.

The remaining four Investment Zones will be located across Scotland, Wales and Northern Ireland (with at least one zone in each nation) and details of the incentives for these are to be agreed in conjunction with the relevant Devolved Administrations. For each of the areas in England identified as a possible location, the Government intends to work with the relevant Mayoral Combined Authority or Upper Tier Local Authority and other local stakeholders to develop tailored proposals for the Investment Zone.

Each Investment Zone is expected to focus on growing clusters of businesses aligned with one or more priority sectors: Digital and Tech, Green Industries, Life Sciences, Advanced Manufacturing and Creative Industries. Subject to the overall funding limit of £80 million for each zone, the plans envisage allowing considerable flexibility over the precise incentives offered to support these clusters.

This flexibility extends to any tax incentives. The incentives which could be offered correspond to those currently offered to Freeports.