UK Investment Landscape: New Opportunities for Business Growth
Has The UK Reopened Its Purse Strings for Business Investment?
In recent weeks, the UK has witnessed exciting developments in its investment landscape. Two of the twelve promised investment zones have opened their doors for business and, additionally, significant support has been announced for two Tata projects, signaling a clear commitment to foster economic growth.
Investment Zones:
Earlier this year the UK Government announced the planned creation of twelve investment zones established across the UK. Aligning with the Government’s ‘levelling-up’ agenda, the eight zones in England are to be based outside of the South East. At the end of June, it was confirmed that Scotland would host two zones (Glasgow City Region and the North East of Scotland) while Wales and Northern Ireland will each accommodate one zone (locations to be announced).
July saw the launch of the first two investment zones in South Yorkshire and the Liverpool City Region and we expect announcements from the other regions in the coming months.
Tailored Support for Growth:
Focused support is being provided to specific regions and sectors. For instance, the South Yorkshire Investment Zone is targeting Advanced Manufacturing, while Liverpool has set its sights on Pharma and Life Sciences.
Each investment zone will benefit from £80 million in government funding utilised by local authorities to attract and nurture investments in their respective regions. The specific details of the support packages are currently being finalised, but eligible companies investing in these zones could avail of various interventions, including assistance with skills development, infrastructure improvement, and tax reliefs tailored to local circumstances.
Potential Support:
From our discussion with different local authorities, we expect the Investment Zones will benefit from a mix of tax incentives, planning liberalisation, training support and other grants.
Some of the potential tax incentives could include:
Business Rate Relief – 100% relief from business rates on newly occupied business premises and certain existing businesses for up to 25 years.
Enhanced Capital Allowances – 100% first year allowance for qualifying expenditure on plant and machinery assets.
Enhanced Structures and Building Allowance – accelerated relief to allow businesses to reduce taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of its cost of investment over five years.
Employer National Insurance Contributions Relief – zero-rate employer NICs on salaries of qualifying employees for part of their time on earnings up to a capped amount.
Stamp Duty Land Tax (SDLT) – full SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for new residential development.
Negotiating support:
While the Investment Zones might not offer grants on the same scale as previous programs like the Regional Growth Fund, numerous schemes exist to support small and medium-sized enterprises. Larger companies can also access grants for training and R&D across the UK and capital investment in select regions. Funding is also available for projects that align with key goals prioritised by the current UK Government.
A prime example of this are the two Tata projects which link into the mobilisation of green investment and the net zero emissions target:
Tata Steel: The UK Governments have reportedly offered £300m to support the upgrade the two blast furnaces at Port Talbot steelworks. The investment would enable the use of renewable energy to power the furnaces and significantly reduce carbon emissions. Part of this funding will come from a new British Industry Supercharger scheme which aims to support three hundred companies in Energy Intensive Industries (EIIs) and bring their energy costs in line with competitors. This includes companies in the steel, metals, paper, automotive manufacturing, and chemicals sectors.
Tata Gigafactory: The new battery factory will play a vital role in the production of the next generation of Jaguar Land Rover electric vehicles in the UK. Britain has lagged European rivals in building electric vehicle (EV) battery gigafactories, with more than thirty planned or under construction across the EU. Britain currently has one small Nissan plant and another in the works. It is expected that Tata Group will receive around £500m in subsidies including a mix of a cash grant, reductions in energy costs, and infrastructure support for the power network and transport connections. Funding for the project from various sources including the Automotive Transformation Fund, the Advanced Propulsion Centre, and the British Industry Supercharger.
Bespoke support packages, like the ones offered to Tata, often will have taken months of negotiation and decisions on alternative options for the investor, which could include closure (as with Port Talbot) or alternative locations outside the UK with competing support packages (as with the Gigafactory).
Unlock Your Investment Potential with Hickey
If you are considering investing in the UK, Hickey can be your trusted partner. We can discuss your investment plans and assist you in evaluating various forms of government support that may be available, and then negotiating a bespoke package to facilitate your investment journey in the UK. Let us help you seize the opportunities that the UK's dynamic investment landscape offers. Contact us today if you have a project you’d like to discuss or if you want to learn more about incentives in the UK.