25
March
2015
|
00:00
Europe/London

Capital allowances enhance investment appeal for Leeds City Region Enterprise Zone




News that companies locating in the Leeds City Region Enterprise Zone can benefit from enhanced capital allowances (ECAs) as one of a number of financial incentives designed to encourage investment and development of the enterprise zone has been welcomed by Leeds City Council, Leeds City Region Enterprise Partnership (LEP) and developers active within the enterprise zone.



The announcement, made in the Chancellor’s Budget Statement, means that companies locating new operations in the Enterprise Zone and making large scale capital investments in plant and machinery will be able to offset costs against taxable profits.



Responding to the announcement, Leeds City Council’s executive member for transport and the economy Cllr Richard Lewis said: “We have lobbied long and hard for enhanced capital allowances as it offers a significant additional incentive that will allow us to attract large scale, capital intensive investment into the enterprise zone and create high value skilled jobs.”



ECAs will be available on designated sites at Logic Leeds and Temple Green, the two largest developments within the Enterprise Zone, which have planning permission for employment space totalling 3.8m sq ft.



Tom Bridges, Leeds City Council chief economic development officer, explained: “ECAs offer a significant financial incentive for large companies that pay corporation tax in the UK when they are looking to make a major investment in plant and machinery.



“A company spending £5m, for example, on qualifying plant and machinery that receives ECAs would benefit from a corporation tax reduction of £1m. That compares with a reduction of £180,000 under normal capital allowance regulations – an immediate net benefit to the company of £820,000.1



“Ideal for capital intensive, high value manufacturing operations, ECAs will make the Enterprise Zone a compelling investment proposition and location for larger multi-national investors who may not currently have operations based in the Leeds City Region.”



Roger Marsh, chair of the LEP, said: “The Leeds City Region Enterprise Zone is rapidly establishing itself as one of the biggest investment opportunities in the country and the announcement of enhanced capital allowances will enable us to attract yet more businesses by strengthening our package of financial incentives, particularly for companies making large-scale capital investments.”



In July 2014, ‘Assisted Area’ status was extended by the EU to parts of the Leeds City Region, including the electoral wards where the Enterprise Zone is situated.2



ECAs will be available to cover investments made before March 2020. For companies making smaller investments, the Enterprise Zone offers reduced business rates worth up to £275,000 over a five year period.



Grants of up to £500,000 are also available through the Leeds City Region business growth programme to companies operating in key business to business sectors, including advanced manufacturing and engineering. The grants, linked to employment creation, cover up to 10% of the total value of an investment in new premises and capital equipment.



[ends]



Notes for editors:

1. Assets are normally written down for accounting purposes at 18% per annum.

Enhanced capital allowance corporation tax reduction calculated as follows:

£5m x 100% ECA x 20% corporation tax = £1m tax reduction



Standard capital allowance corporation tax reduction calculated as follows:

£5m x 18% x 20% corporation tax = £180,000

2. Public sector financial assistance for business is normally restricted to a maximum of €200,000 over a three year period and only available to SMEs, defined as companies with less than 250 employees and a turnover no greater than €50 million. The company must be an independent entity with no external shareholdings greater than 25%. Assisted Area status removes the restriction on the level of financial support. Normal ‘state aid’ regulations apply outside Assisted Areas.

3. Covering 142 hectares of prime development land, less than 3 km to the south east of Leeds city centre, Leeds City Region Enterprise Zone enjoys a prime location for business investment and expansion with direct access to the national motorway network at junction 45 of the M1. Companies locating in the Enterprise Zone can receive reduced business rates worth £275,000 over a five year period plus a bespoke package of business support. Building work is now under way on all four of the main sites within the 142 hectare Leeds City Region enterprise zone with 260,000 sq ft of employment space currently committed and under construction. The Enterprise Zone is a spatial priority within the Leeds City Region Enterprise Partnership’s (LEP) Strategic Economic Plan with significant potential to create employment and boost economic growth, particularly in the manufacturing sector and related supply chains.