Scottish Green Freeports – Opportunities and tax advantages for your business?

Recently, I’ve had a few questions about the opportunities that Green Freeports offer:

How can we capitalise on the tax advantages that these free trade zones offer?
Are there other advantages, like reduced import and export regulations?
Can local businesses, like mine, get involved?

So, I thought I would write an article to dispel some of the myths and misunderstandings that surround these locations.

What is a Green Freeport?

The Scottish and UK Governments have selected the Inverness and Cromarty Firth Green Freeport and Forth Green Freeport to be the first of these initiatives.

In simple terms, they are designated zones where businesses can benefit from special tax and regulatory regimes.

The Government’s objectives are ambitious:

Fostering regeneration and job creation
Supporting the transition to a net zero economy through decarbonisation
Establishing global trade and investment hubs
Encouraging innovation

However, what we want to focus on is how our clients can utilise these zones for their own business growth.

Why should you care?

Green Freeports, while championing environmental causes, also present lucrative opportunities for tax savings for your business.

The benefits and allowances on offer include:

Employer National Insurance Contributions (NICs) relief: This relief is available until at least April 2026. Businesses in Green Freeports can benefit from a reduction in Employer NICs, decreasing the cost of hiring new employees and encouraging job creation.
Streamlined customs processes: Green Freeports facilitate efficient customs procedures, allowing for the movement of goods under duty suspension between different Green Freeport customs sites and to other Freeports. This can result in significant cost savings and operational efficiencies for businesses involved in international trade.
Duty relief for business assets: While Freeports offer duty suspension for the storage and processing of goods, it's important to note that duty relief is not extended to business assets or machinery used in processing. These items need to be declared to free circulation with relevant duties paid.
LBTT Green Freeports relief: This is a full or partial relief from Land and Buildings Transaction Tax (LBTT). Full relief applies if over 90 per cent of the transaction's chargeable consideration is for qualifying land in a Green Freeport – partial relief applies for at least 10 per cent qualifying consideration.
Potential tax site benefits: The tax sites within Green Freeports are subject to specific criteria, including size limitations and development considerations. These sites offer a focused environment for business operations, potentially leading to further fiscal and regulatory advantages.
Enhanced structures and buildings allowance relief: This allows you to claim tax relief on qualifying expenditures for buildings and structures within a UK Freeport tax site. To qualify, construction must begin, and the building or structure must be brought into use and incur qualifying expenditure within the Freeport tax site by 30 September 2026.
Business rates relief: The government plans to provide up to 100 per cent business rates relief, effective from 1 October 2021, for five years from when relief is first received, with a deadline of 30 September 2026. Additionally, councils hosting Green Freeport tax sites will retain business rates growth above a set baseline for 25 years, mirroring the approach of Enterprise Zones, to encourage local investment in regeneration and infrastructure.

In short, these incentives could provide a springboard for the growth, development, and expansion, of your business.