100% Tax relief confirmed for two Scottish Green Freeports

The two winning bids for the new Scottish Green Freeports have been announced having been jointly selected by the Scottish and UK Governments:

• Inverness and Cromarty Firth, and
• Firth of Forth

Similar to the existing eight Freeports operating across England, they will be supported by up to £52 million in start-up funding, as well as benefit from increased tax reliefs and other incentives such as customs arrangements and supportive planning policy. Scottish Green Freeports, as distinguished by their name, do however go beyond their English counterparts with a more substantial focus on ESG impacts. Applicants to the bidding process were required to demonstrate how they would:

• contribute towards transitioning to net zero emissions by 2045;
• create new, ‘green’ jobs; and,
• support high-quality employment opportunities with fair work conditions at their core.

The Firth of Forth and Inverness and Cromarty Firth Green Freeports are expecting to create a total of 75,000 new jobs and generate £6bn and £2.6bn of investment, respectively. Whilst they are both expected to be heavily focussed on ‘green’ initiatives, Firth of Forth will do this through renewables, advanced manufacturing, alternative fuels, carbon capture utilisation and storage, shipbuilding, logistics and the creative industries. Inverness and Cromarty Firth will focus on the floating offshore wind manufacturing and green hydrogen sectors.

There is still speculation from some parties that the ‘Freeports’ scheme will not work, with concerns expressed regarding the lighter regulations potentially opening the UK up to money laundering and tax avoidance, as well as a lack of specific obligations in legislation for the Scottish Green Freeport operators to fulfil on the bidding requirements for companies to meet climate targets or implement the fair working practices. The British Ports Association (BPA) has also called for more widespread assistance for ports across all regions, noting that some ports and communities may be left behind.

As well as the customs arrangements and supportive planning policy already noted, the Green Freeports will benefit from retention of business rates above an agreed level, the aforementioned seed capital, direct access to regulators for early engagement and SDLT exemptions. Businesses within ‘tax sites’ at the ports will also benefit from NIC and business rates reductions, and enhanced rates of capital allowances – 100% for plant & machinery and 10% for structures and buildings allowances (boosted from the default 18% and 3% annual allowances respectively).

Whilst the incentives offered for Freeports, across the UK (with a single further site yet to be announced for Wales), are, on the face of it, abundant, many of the incentives are currently expected to end on 30 September 2026. This does create significant timing issues for those involved within the Freeports, as we have seen from the English sites that it has taken quite some time to get projects off the ground, with many eating substantially into their initial five-year incentive window by nearly two and half years. It is therefore important for investors and operators within the Freeports locations to ensure that they are factoring in the deadlines for the incentives so as to make the most of the tax reliefs on offer - or persuade the Government to extend the cut-off date.

The two Green Freeports are expected to become operational later this year.

Please do contact the team on 0345 230 6450 or hello@e3consulting.co.uk with any queries or for assistance with your property tax matters. We look forward to speaking with you soon.