Tax benefits and advantages of setting up in a freeport

15th May 2023 | News

If you are considering setting up a business in this country, you may want to consider the benefits of setting up in a freeport.

Freeports are designated areas that are exempt from certain tax and regulations, making them an attractive location for businesses looking to reduce their operating costs and increase their competitiveness.

In this article, we will explore what a freeport is and the tax benefits and advantages of setting up in one.

What is a freeport?

A freeport is an area that is physically located within the United Kingdom, but legally considered outside of the country’s customs territory.

This means that goods and materials can be imported into a freeport without being subject to the same tax and regulations that apply to imports into other parts of the country.

Instead, tax and regulations are deferred until the goods leave the freeport and enter the domestic market. Freeports are designed to encourage economic growth and investment by making it easier and cheaper for businesses to import and export goods.

The UK government announced plans to establish at least ten freeports across the country, with the first opening last year.

Each freeport will have its own unique characteristics and advantages, depending on its location and the industries that operate within it.

However, there are some general tax benefits and advantages that apply to all freeports.

What are the tax benefits?

Tariff benefits

One of the main tax benefits of setting up in a freeport is the ability to import goods into the designated area without paying tariffs or customs duties.

This can significantly reduce the cost of importing raw materials and components, making it easier for businesses to manufacture goods and compete in the global market.

VAT deferral

Businesses that operate within a freeport can also defer the payment of VAT on imported goods until they leave the designated area and enter the domestic market.

This can help to improve cash flow and reduce the financial burden on businesses.

Capital gains tax relief

Freeports also offer capital gains tax relief for businesses that invest in qualifying assets within the designated area.

This means that businesses can sell or dispose of assets without incurring a capital gains tax liability, as long as the proceeds are reinvested in qualifying assets within the freeport.

Business Rates relief

Businesses that operate within a freeport can also benefit from business rates relief, which can significantly reduce their operating costs.

The exact amount of relief will vary depending on the location and size of the freeport, but it is designed to encourage investment and economic growth in the area.

Enhanced Research and Development incentives

Freeports also offer enhanced research and development incentives for businesses that conduct research and development activities within the designated area.

This includes increased tax relief for qualifying R&D expenditure, as well as other incentives designed to encourage innovation and investment.

Employment tax benefits

Finally, businesses that operate within a freeport can benefit from a range of employment tax benefits, including national insurance contribution relief and enhanced capital allowances for qualifying investments in plant and machinery.

These incentives are designed to encourage businesses to create jobs and invest in the local area, helping to drive economic growth and improve employment opportunities.

List of current and recently announced UK freeports


In conclusion, setting up a business in a freeport can offer a range of tax benefits and advantages that can reduce operating costs and increase competitiveness.

From tariff benefits and VAT deferral to capital gains tax relief and business rates relief, freeports come with many incentives designed to encourage investment and economic growth.

If you are interested in setting up a business in a freeport and want to ensure that you are taking full advantage of the tax benefits and incentives available, Williamson & Croft can help.

Our tax experts can provide you with the advice and support you need to navigate the complex regulations and requirements associated with setting up in a freeport.

The Williamson & Croft team can help you to identify the tax benefits and incentives that are most relevant to your business, as well as provide you with guidance on compliance, reporting, and other important considerations.

With our help, you can ensure that your business is set up for success in a freeport and can take advantage of all the opportunities that it has to offer.

Contact us today for further information.

Williamson & Croft is a market leading accountancy, advisory and tax firm with particular specialisms in property, construction, retail, digital and creative, technology and professional services.

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