You probably heard the Chancellor announce the introduction of eight freeports across England in his Budget. Are you aware of what that means and how freeports might benefit you and your business?
What is a freeport?
Freeports used to exist until 2012 when they were finally eradicated. They are huge areas of land located at ports which are secure customs zones. They allow for business to be carried out inside the English border, where different customs rules apply.
The aim of a freeport is to reduce administration and tariff controls, and to provide relief for duties and import taxes.
Freeports offer a physical buffer for imported goods between the land border and the duties border, meaning within the freeport there are fewer tax regulations on goods entering or exiting the country.
Is there customs and VAT payable on goods in freeports?
The simple answer is no. No tariffs, import VAT, or excise will be paid on goods brought into a freeport from overseas until they leave that freeport to enter the UK market.
There is some planning that can be implemented here.
For example, a manufacturer where the tariff for the finished goods is lower than that on the component parts. The company could manufacture the final product within the freeport and then pay the duty on the finished product when released from the freeport into the UK market.
Similarly, a company could import the component parts without duties, then manufacture the product in the freeport, and then pay no tariffs when the final product is then exported.
Where will they be?
Eight locations were announced, which are:-
What about tax incentives?
In addition to the customs and import VAT relief, businesses will also be able to claim reliefs from certain taxes within the bounds of the freeport. The current proposals include the following:-
Should you have questions about freeports or how they may be useful for your business then please do get in touch.