How do enterprise zones work and can they be used by startups?
With the advent of the digital era and the rise in the trend of self-employment, the government has launched enterprise zones all across England to promote a higher level of economic activities in the country. If you haven’t started a business yet, the first step would be to form a company using a competitive startup accountant.
Enterprise zones are designated areas spread across England that serve as one component of a broader industrial growth strategy. Through these zones, the government intends to provide financial support to businesses and trigger unprecedented levels of economic growth.
The programme officially launched when the first 24 enterprise zones were set up in 2012. Later, in 2016 and 2017, 24 new zones became part of this initiative. Use the enterprise zone finder to find a zone near you.
These zones not only provide countless opportunities for startups and expanding businesses but also benefit the entire community located around such zones. Thus helping the economy in general. If you want to know more about economic zones you should read more on the government’s website or speak to your accountant.
If you wish to set up your business in one of these economic zones, you will be required to set up a tax-effective infrastructure for your business. A startup accountant or a competent accountant can guide you on how to set up an effective organisational structure.
This article discusses how these zones can prove to be gold mines for businesses, local communities and the economy in general.
What do these Enterprise Zones bring in for businesses?
Businesses located in enterprise zones get to enjoy multiple benefits both in monetary terms and growth. Each company has the opportunity to avail of two types of financial benefits depending on the business’s location in these zones.
- Each business will have the opportunity to enjoy 100% business rate discounts that can amount to up to ยฃ 275,000 for a period of 5 years. Or
- Each business can avail of 100% enhanced capital allowance given that it is ready to invest heavily in plant and machinery located in any of the eight zones in the ‘Assisted Areas’.
- Businesses will also get to enjoy local authority planning, for instance, if one intends to develop a new industrial building in a specified area. The simplified planning will allow businesses to enjoy Local Development Orders that will enable them to plan for such developments without complications.
Related: Learn more about the structure of capital allowances in the UK by reading our comprehensive guide
For Enterprise Zones launched in 2016 and 2017
If you are planning to set up your business in Enterprise Zones launched in 2016 and 2017, then you must move your business to the designated location before March 2021 or 2022.
For Enterprise Zones launched in 2012:
If you plan to move or set your business on the Enterprise Zones launched in 2012, there is a slight chance you may still be able to enjoy business rates discounts.
Businesses that are already operating on the Enterprise Zones launched in 2012 can enjoy these discounts and tax breaks for a period of 5 years from the date they moved on to the location.
When starting a business, you need not only to worry about funding, but you will also come across complications related to tax compliance. Get your company structure right by speaking to a startup accountant, and pay less taxes by speaking to competitive tax accountants.
For Assisted Areas:
Businesses located in Assisted Areas of the Enterprise Zones get to enjoy enhanced Capital Allowances. These capital allowances enable firms to make substantial investments in plant and machinery for a period of 8 years from the inauguration of the Enterprise Zones.
Claiming capital allowances can get complicated, however its best for your startup accountants to help you process these more effectively.
How have the Enterprise Zones provided value for the local community?
With so many attractive opportunities for businesses, access to new development sites, the rise of new infrastructure and income opportunities for workers, Enterprise Zones have enabled the local communities to witness unprecedented levels of economic growth.ย
Local enterprise partnerships and local authorities get to keep the revenues generated from businesses operating within these zones. The local business partnerships and bodies then relocate these revenues within different sectors of the local economy, such as labour training for skill development and increase in productivity. According to the government, more than 15,500 jobs had been created in these zones by 2015.
The support provided by the government in developing these zones is applaudable and commendable, for instance:
- the Department of Environment offers all the expertise and solutions to address complex environmental issues.ย
- The Department of International Trade advises the concerned administration on how to market these zones to hook the interest of foreign investors and other business people.
- The Department of Transport usually provides the support needed to work out the level of transport infrastructure development on each of these zones.
What’s in there for the local economy?
With substantial tax breaks and hugely discounted business rate offers, foreign investors are now looking to capitalize on these economic zones. Enterprise zones have been successful in accumulating foreign investment into the relevant regions and have generated more jobs for UK nationals. Modern infrastructure and sophisticated technologies help develop these zones to ensure long-term sustainable growth that benefits everyone.ย
Related: Learn more about the different business strategies that can help you grow your startup.
Clear House Accountantsย are specialistย startup Accountants in London who have worked hard to develop processes and methodologies to add value to their client’s businesses using smart solutions and state-of-the-art tools.ย Speak to us to learn more.ย
