Referral of the proposed Scottish Investment Zones subsidy scheme by Ministry of Housing, Communities and Local Government
Source: gov.uk (2025-08-18)

The Subsidy Advice Unit (SAU) has published a report providing advice to UK Ministry of Housing, Communities and Local Government (MHCLG) concerning its proposed Scottish Investment Zones subsidy scheme.

Administrative timetable

Final report

18 August 2025: The SAU has published its report providing advice to MHCLG concerning the proposed Scottish Investment Zones scheme. The report sets out the SAU’s evaluation of MHCLG’s Assessment of Compliance of its proposed scheme with the requirements set out in the Subsidy Control Act 2022.
- Final report (https://www.gov.uk/government/publications/report-on-the-proposed-scottish-investment-zones-subsidy-scheme-by-ministry-of-housing-communities-and-local-government) (18.08.25)
Request from MHCLG

8 July 2025: The SAU has accepted a request for a report from MHCLG concerning the proposed Scottish Investment Zones subsidy scheme. This request relates to a Subsidy Scheme of Particular interest.

The SAU will prepare a report, which will provide an evaluation of MHCLG’s assessment of whether the scheme complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.

Information about the scheme provided by MHCLG

The Scottish Investment Zones subsidy scheme will come into effect from Autumn 2025, ending in 2035. The scheme will allow the relevant public authorities to give subsidies in Scottish Investment Zones in the form of tax reliefs or grant funding in order to help achieve the objectives of the policy. Investment Zones are seen as a critical part of the economic growth agenda and are expected to catalyse investment into a small number of high-potential areas to boost productivity and growth.

UK Government will offer each Investment Zone area a funding envelope of £160 million over 10 years. Subsidies under the scheme can be given in the form of tax relief or grants. Businesses are eligible to receive a subsidy in the form of tax relief if they undertake the following activity in an Investment Zone tax site. These will be available for 10 years:
- a full Land and Building Transaction Tax relief for land and buildings bought for commercial use or development for commercial purposes
- 100% relief from non-domestic rates for up to 5 years on newly occupied business premises, and certain existing businesses where they expand in Investment Zone tax sites
- 100% first year capital allowance for companies’ qualifying expenditure on plant and machinery assets for use in tax sites
- accelerated relief to allow businesses to reduce their taxable profits by 10% of the cost of qualifying non-residential investment per year, relieving 100% of their cost of structures and buildings over 10 years
- zero-rate Employer National Insurance Contributions (NICs) on salaries of any eligible new employee working in the tax site for at least 60% of their time, on earnings up to £25,000 per year, with Employer NICs being charged at the usual rate above this level. This relief can be applied for 36 months per employee
Subsidies given as grant must be given to businesses for an intervention under the 4 themes of the scheme:
- skills
- research and innovation
- local infrastructure
- business support
Subsidies must comply with the criteria as published in Section 7 of the Investment Zones technical document (https://www.gov.uk/government/publications/investment-zones-technical-document/investment-zones-technical-document). Accountable bodies must use objective and transparent selection criteria that are available to potential recipients in advance of giving the subsidy and be subject to the public authority’s existing accountability frameworks.

Information for third parties

If you wish to comment on matters relevant to the SAU’s evaluation of the Assessment of Compliance concerning the proposed Scottish Investment Zones subsidy scheme, please send your comments by the date stipulated in the timetable above. For guidance on representations relevant to the Assessment of Compliance, see the section on reporting period and transparency in the Operation of the subsidy control functions of the Subsidy Advice Unit (https://www.gov.uk/government/publications/guidance-on-the-operation-of-the-subsidy-control-functions-of-the-subsidy-advice-unit/operation-of-the-subsidy-control-functions-of-the-subsidy-advice-unit).

Please send your submissions to the public authority xxx@xxx.xx (mailto:xxx@xxx.xx)

Please also provide a contact address and explain in what capacity you are making the submission (for example, as an individual or a representative of a business or organisation).

Notes to third parties wishing to make a submission

The SAU will only take your submission into account if it can be shared with MHCLG. The SAU will send a copy of your submission to MHCLG together with its report. This is to allow the public authority to take account of the submission in its decision as to whether to make or modify the subsidy or its assessment. We therefore ask that you provide express consent for your full and unredacted submission to be shared. We also encourage you to share your submission directly with MHCLG using the email address provided above.

The SAU may use the information you provide in its published report. Therefore, you should indicate in your submission whether any specified parts of it are commercially confidential. If the SAU wishes to refer in its published report to material identified as confidential, it will contact you in advance.

For further details on confidentiality of third party submissions, see identifying confidential information in the Operation of the subsidy control functions of the Subsidy Advice Unit (https://www.gov.uk/government/publications/guidance-on-the-operation-of-the-subsidy-control-functions-of-the-subsidy-advice-unit/operation-of-the-subsidy-control-functions-of-the-subsidy-advice-unit).

Contacts
- CMA press team: xx-xxxx-xxxx or xxx@xxx.xx (mailto:xxx@xxx.xx)