Enterprise Zones: Plant and machinery allowances

What is an Enterprise Zone (EZ)? Enterprise Zones were designed to attract new business to their area by offering a package of measures from capital allowances and business rate relief to planning relaxations.

This is a freeview 'At a glance' guide to Enterprise Zones (EZs).

At a glance

• A list of EZs is published by England, Scotland, Wales, and Northern Ireland.
• There have also been a number of extensions to existing EZs.
• EZs are given Enhanced Capital Allowances (ECAs) in the form of first-year allowances of 100%.
• Relief is given for investment in new plant and machinery for use in designated assisted areas within EZ.
• The investment limit is €125 million.
• ECA were available for UK resident trading companies from 1 April 2012 to 31 March 2021, or 8 years from the date the area was designated as an EZ or treated as so designated, as extended by Budget 2020.
  • Allowances are therefore now largely historic. 

Business rate relief

• Relief is available for businesses that move into an EZ before certain dates.
• Businesses receive a business rate discount of up to 100% over a five-year period.

Excepted businesses

Unincorporated businesses, including partnerships with corporate partners, are not eligible for special relief in EZs.

Certain sectors are excluded and expenditure does not qualify for allowances if it relates to:

• Fisheries and aquaculture sectors.
• Transport sector or related infrastructure.
• Management of waste of undertakings.
• Coal, steel, or shipbuilding.
• Synthetic fibres sector.
• Energy generation, distribution or infrastructure.
• Development of broadband networks.
• Primary production of agricultural products, including farm activities preparing a plant or animal for the first sale.

Qualifying expenditure

To qualify for enhanced capital allowances, expenditure must:

• Be on plant or machinery that is unused and not second-hand.
• Used primarily in designated assisted areas within EZs.
• Comprise investment and not replacement expenditure.
• Not related to the excluded sectors above.
• Not be taken into account for the purposes of another State Aid grant or relevant payment made towards that expenditure.

ECAs in Enterprise Zones

From 1 April 2020 to 31 March 2021

• Statutory Instrument 2020/260 extends the 100% allowance until at least 31 March 2021.
• Policy paper: Enhanced Capital Allowances in Enterprise Zones

Small print and links

Enterprise Zones were originally introduced in 2012. The time limits for tax reliefs were extended in Budget 2014 and in Budget 2020.

Legislation relating to Enterprise Zones and capital allowances is CAA 2001 s.45K to s.45N.

Finance Act 2016 amends CAA 2001 s.45K so that ECAs are available for eight years following the establishment of the EZ.

Government information about Enterprise Zones 

HMRC maps showing the locations of Enterprise Zones