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In your store's Admin area, go to the System > Localization > Locations

Enter 

Location Name: Name of the location. You can define this as anything you like.

Description: Description of the location. You can define this as anything you like.

After you have made your changes, click save button

The Location Zones Tab will appear. Adding Location Zone - click on insert  button.

Select Country and Country Zone.




Tip

You can add/remove several Location Zones to/from your Location with no limitations.




Locations can be set up for taxes, shipping methods and payment methods.

Example for the Royal Mail shipping zones:
Location Name - UK Royal Mail
Description - UK Royal Mail Shipping Zones
Country - United Kingdom
Zone - Aberdeen
Country - United Kingdom
Zone - Aberdeenshire
Country - United Kingdom
Zone - ..etc...

You might not want to include all zones as some UK zones may be offshore and require a higher shipping rate.