The Designation of Special Tax Sites (East Midlands Investment Zone) Regulations 2025
These regulations, enacted under the Finance Act 2021, designate three areas in the East Midlands as 'special tax sites' to boost economic activity within the East Midlands Investment Zone.
This designation provides enhanced capital allowances for plant, machinery, structures, and buildings, along with stamp duty land tax relief, for qualifying companies and investments within these zones.
The designated sites are explicitly defined by maps, and the regulations took effect on February 26, 2025.
Arguments For
- Intended benefits: Stimulate economic growth in the East Midlands by attracting investment and business activity to designated zones through enhanced tax incentives.
- Evidence cited: The regulations cite the Finance Act 2021, section 113, as the legal basis, implying existing governmental support for this approach to regional development.
- Implementation methods: Specific areas are clearly designated via maps, providing a transparent and geographically defined approach to the policy's implementation.
- Legal/historical basis: The regulations are made under the authority of section 113 of the Finance Act 2021, demonstrating a clear legislative foundation.
Arguments Against
- Potential impacts: Could lead to uneven regional development, concentrating benefits in designated areas while neglecting others. May create complexities for businesses navigating the different tax regulations across varying locations.
- Implementation challenges: Accurate mapping and clear communication of the designated areas are crucial to avoid confusion and administrative difficulties for businesses and tax authorities.
- Alternative approaches: Other incentives or regional development strategies could be employed to stimulate economic activity, possibly with a broader reach or a different focus.
- Unintended effects: The tax incentives may not attract the desired type or scale of investment, or could disproportionately benefit larger firms over smaller enterprises.
These Regulations may be cited as the Designation of Special Tax Sites (East Midlands Investment Zone) Regulations 2025 and come into force on 26th February 2025.
In these Regulations, a reference to an area 'shown edged and hatched in red' on a map is a reference to the hatched area extending up to the red edging, but not including the red edging itself.
These regulations are officially titled the 'Designation of Special Tax Sites (East Midlands Investment Zone) Regulations 2025' and became active on February 26, 2025.
The regulations clarify that when a map is referenced, the 'red hatched' area is indicated through hatching up to, but not including, the red edge of the marking.
The following areas are designated as special areas for the purposes referred to in section 113 of the Finance Act 2021-
(a) the areas shown edged and hatched in red on the map entitled 'Centre of Excellence for Modern Construction (CEMC) Tax Site' and dated 25th September 2024;
(b) the areas shown edged and hatched in red on the map entitled 'Hartington Tax Site' and dated 2nd October 2024;
(c) the areas shown edged and hatched in red on the map entitled 'Infinity Park Derby Tax Site' and dated 5th December 2024.
The designations made by paragraph take effect on 26th February 2025.
Three specific geographic areas are designated as special tax sites under section 113 of the Finance Act 2021: the Centre of Excellence for Modern Construction (CEMC) Tax Site (map dated September 25, 2024), the Hartington Tax Site (map dated October 2, 2024), and the Infinity Park Derby Tax Site (map dated December 5, 2024).
These designations became effective on February 26, 2025.
EXPLANATORY NOTE (This note is not part of the Regulations) These Regulations designate areas, known as 'special tax sites', as special areas for the purposes of Parts 2 (plant and machinery allowances) and 2A (structures and buildings allowances) of the Capital Allowances Act 2001 (c. 2) ('CAA 2001') and Part 4 (stamp duty land tax) of the Finance Act 2003 (c. 14) ('FA 2003). Section 45O in Part 2 of CAA 2001 provides that expenditure incurred by a company on the provision of plant and machinery for use in a special tax site qualifies for enhanced capital allowances if certain conditions are met. Section 270BNA in Part 2A of CAA 2001 provides that expenditure incurred on non-residential structures and buildings situated in a special tax site qualifies for an enhanced annual rate of structures and buildings allowances if certain conditions are met. Section 61A in Part 4 of, and Schedule 6C to, FA 2003 provide for relief from stamp duty land tax for acquisition of land situated in a special tax site if certain conditions are met. A Tax Information and Impact Note covering this instrument was published on 15th March 2023, alongside Spring Budget 2023 and is available electronically at https://www.gov.uk/government/publications/investment-zone-special-tax-sites/investmentzone-special-tax-sites-with-enhanced-tax-and-national-insurance-contributions-reliefs. It remains an accurate summary of the impacts that apply to this instrument.
The explanatory note clarifies that these special tax sites offer benefits under the Capital Allowances Act 2001 (CAA 2001) and the Finance Act 2003 (FA 2003).
Specifically, companies operating within these sites receive enhanced capital allowances for plant, machinery, structures, and buildings.
Furthermore, the acquisition of land in these areas qualifies for stamp duty land tax relief under specific conditions.
A detailed Tax Information and Impact Note is available online, providing further context on the tax implications and broader economic impacts.