Chancellor Kwasi Kwarteng announced the creation of low tax “investment zones” in today’s mini budget – an event already deemed the UK’s biggest tax cutting event in 50 years.
The government has reported that it’s in early discussions with 38 local authorities in England about establishing investment zones, which will feature streamlined planning processes to release land for development. Up to 12 places will ultimately receive the designation. Lawmakers also said they will work with the UK’s devolved administrations to set up investment zones across the country.
Within the zones, designated areas will benefit from 100 per cent business rates relief on newly occupied or expanded premises. Companies in the investment zones will receive stamp duty relief on land purchased for commercial or residential development, as well as a zero rate for employer national insurance contributions on new employee earnings up to £50,270 a year.
To incentivise investment there will be a 100 per cent capital allowance relief for plant and machinery used within designated sites in the first year, and enhanced structures and buildings allowance relief of 20 per cent per year.
Prime minister Liz Truss debuted the investment zones concept during her campaign for the Tory leadership. At the time, she said that the scheme was “at the heart of my vision for levelling up”.
Critics of the policy have pointed out that many regions outside of south east England are already relatively cheap places to do business – and despite these low costs, business investment has remained stubbornly low. On a national level, it has stayed below its peak in real terms since the 2016 referendum on EU membership.
