If you’re setting up a business and have some flexibility about where to locate it, you may want to give serious thought to an enterprise zone. Enterprise zones bring a wealth of opportunities for small businesses, such as tax reliefs, business rates discounts and easier access to planning permission. Here’s how they work and where you can find them.
What is an enterprise zone?
An enterprise zone is typically a small area of the UK that has been set up to encourage investment and development. Consequently, small businesses that wish to establish themselves in an enterprise zone can benefit from a number of incentives, both financial and otherwise.
There are 48 zones around the UK that have been selected as part of the initiative. In these areas, start-up businesses have a number of benefits for up to five years, such as discounts on business rates, tax relief and a simplified application process for gaining planning application.
The government initially set out 24 zones in 2012 and then added another 24 to the list in 2016 and 2017 following the success of the scheme. The idea is to boost local economies while supporting small and growing businesses.
What tax reliefs and other benefits can businesses get?
The local authority in each area can decide exactly what discounts they assign to businesses in an enterprise zone, but you could be given the following:
- Business rates – Either a discount or a complete exemption from paying rates. It could save your business up to £275,000 over a five-year period.
- Tax relief – Businesses making large investments in plant and machinery in eight zones qualify for enhanced capital allowances, meaning they can set the whole cost of their investments against their profits
- Planning permission – It’s much easier to gain planning permission within the specific areas.
It’s worth pointing out that you would have to choose either the business rates OR tax relief benefit, but you can have either alongside the planning permission assistance.
Where are the enterprise zones in the UK?
The entertprise zones in the UK can be found in England, Wales and Scotland, mostly in or near cities. Currently there is only one enterprise zone in Northern Ireland, in Coleraine.
Enterprise zones in England
If you are considering starting a business in one of England's new 24 zones, you will need to locate within the area before March 2021 or 2022. If you’re looking to establish in one of the original zones, contact the local authority there to see if benefits are still available. The enterprise zones website can help you find your nearest enterprise zone in England.
Enterprise zones in Wales and Scotland
There are currently eight enterprise zones in Wales, and you can find your nearest zone here.
Scotland has four enterprise zones - which it calls 'enterprise areas' - across 16 locations. You can find your nearest enterprise area here.
Why start a business in an enterprise zone?
Apart from the obvious financial benefits and planning opportunities, there are many more good reasons for choosing an enterprise zone for the location of your business.
For starters, you would be getting established in an up and coming area that’s likely to see an influx of people moving there and taking new jobs, bringing more prospects for rapid growth. For the same reason, you could also attract stronger talent.
Depending on how developed the area is currently, you might be able to get more space for your business as the commercial property prices may be cheaper. That can make a real difference when coupled with the leeway from the preferential rates. Most of these areas are in cities, so you could also base yourself closer to the centre than you might have expected – leading to greater footfall and brisker business. Finally, there is a push for developing the infrastructure in these areas, creating strong connections for your business.
Talk to your accountant about the practicalities of setting up in an enterprise zone.