Investors looking for their next portfolio addition may be thankful for the UK governments new idea: low-tax investment zones- quite simply, it would mean certain UK individuals and businesses pay next to no taxes.
As of recently, it has been the UK governments idea to setup two low-tax investment zones in Wales. However, some of the first will beset up in England itself, with later plans to roll them out in Scotland and Northern Ireland later down the line.
But why, and what is the benefit of these zones?
The UK government has recently concluded extended negotiations with the Welsh government on terms of creating a lower-tax freeport in Wales- this comes with the benefit of simplified customs procedures, relief on customs duties, tax benefits and development flexibility. And it was this idea that has slowly led to Truss believing more of the country can benefit from these freeports.
The investment zones come with a secondary name, ‘full fat freeports’. Under Truss’ plan, areas will benefit from a low-tax burden, reduced planning restrictions and regulations tailored on a case-by-case basis. This also may also benefit workers in the area, whose personal taxes may be cut for working in the zone.
Currently, the government is supposedly looking at areas such as: West Midlands, Thames Estuary, Tees Valley, West Yorkshire, and Norfolk as contenders for the preliminary sites.
Ultimately, these new full fat freeports are a further step forward from Boris Johnson’s previously named post-Brexit freeports and will become part of a package that will see a rise in national insurance contributions abandoned, the plan of increased corporation tax scrapped and green levies temporarily removed from fuel bills.
It is argued that these new freeports, alongside the previously assumed tax cut, which disproportionately benefits wealthy workers, contributes to the government’s stance on supporting wealthy individuals. However, until plans are put in place, there is no evidence of who will benefit from the new free ports, and what type of investment they plan to lower tax for.
What is known for now, is that these freeports and tax cuts coincide with Truss’ other two major priorities, energy bills and the NHS.