UPDATE 1-UK 'closing in' on free trade agreement with New Zealand

(Changes sourcing, adds background)

July 31 (Reuters) - Britain is nearing an agreement in principle on a free trade deal with New Zealand, its trade ministry said on Saturday, as London looks to bolster its post-Brexit trade ties with non-EU partners.

The European Union is Britain's single largest trade partner and the two sides have signed a post-Brexit trade pact, but business groups say they still face extra red tape dealing with European customers and suppliers as a result of Brexit.

Trade minister Liz Truss said that "great progress" had been made in a sixth round of discussions which ran from July 19-30.

A trade agreement with New Zealand could see the removal of tariffs on British and New Zealand goods making products available at lower prices, the ministry said.

A deal would also enable small and medium enterprises to export more goods and services to New Zealand, it added.

"We're closing in on an agreement in principle, with 6 more chapters now complete," Truss said.

In June Britain received a green light to start the process of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade bloc of 11 countries.

In June Britain's trade ministry also signalled confidence in its trade talks with New Zealand and said it aimed to conclude a "fantastic" agreement in August.

(Reporting by Akriti Sharma and Aakriti Bhalla in Bengaluru; Additional Reporting by Aishwarya Nair in Bengaluru; editing by Richard Pullin and Jason Neely)