What is an enterprise zone and how can it help your business?

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 many incentives, both financial and otherwise.

There are 48 zones in England selected as part of the initiative. In these areas, start-up businesses receive several benefits for up to five years, such as discounts on business rates, tax relief and a simplified application process for gaining planning permission. 

The government initially set out 24 zones in 2012 and added another 24 to the list in 2016 and 2017 following the scheme's success.

Similar policies have been adopted by devolved administrations in Scotland, Wales and Northern Ireland. The idea is to boost local economies while supporting small and growing businesses. The government says it is not planning to extend the programme further.

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 five years.
• 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 exemptions.

Where are the enterprise zones in the UK?

The enterprise zones in the UK can be found in England, Wales and Scotland, mostly in or near cities.

For example, there are zones in Blackpool, Exeter, Hereford, Leicester, Luton, Sheffield, and West Lothian. Currently there is only one enterprise zone in Northern Ireland, in Coleraine.

Enterprise zones in England

If you are considering establishing a business in one of England’s 24 newest enterprise 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, called '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 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 commercial property prices may be cheaper.

That could make a real difference to your business profitability when coupled with the other benefits. Most of these areas are in cities, so you could also base yourself closer to the centre than you expected, potentially leading to greater footfall.

Finally, there is a push for developing the infrastructure in these areas, creating strong connections for your business.

What about investment zones?

In the Spring Budget 2023, the government launched a new investment zones programme. 

It aims to regenerate certain regions of the UK by offering businesses tax relief to attract trade and jobs. Funding for this programme was confirmed by the Labour government in the Autumn Budget 2024.

There will be 13 investment zones in the UK, which should be operational by the 2024-25 financial year. You can learn more about the opportunities for businesses by visiting the web page of the relevant local council for each area.

The government also has an initiative called Freeports, which includes a package of incentives for businesses operating in areas surrounding sea and air infrastructure.

Get expert financial advice

Let Unbiased connect you with an expert financial adviser who can help you assess your eligibility for enterprise or investment zone benefits to help you grow your new business.