Where do the opportunities lie with the new Scottish Green Freeports?

Green Freeports 2023

Inverness and Cromarty Firth Green Freeports and Forth Green Freeport have been selected to become Scotland’s first Green Freeports following agreement between the Scottish & UK Governments. Their bids will be supported by up to £52 million in UK Government start-up funding. Businesses in the areas will benefit from more generous tax reliefs, simplified customs procedures and wider government support, bringing with it investment, trade and jobs.

The Forth Green Freeport will have a focus on renewables manufacturing, alternative fuels, carbon capture utilisation and storage and shipbuilding, as well as the development of a new creative hub. The Inverness and Cromarty Firth Green Freeport will have a focus on floating offshore wind, nuclear and hydrogen that will drive a transition to net zero by 2045.

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What is a Freeport?

An approved port is a free economic zone, where normal tax and customs rules do not apply. Imported goods can enter the UK with simplified customs documentation and without paying customs tariffs.  Companies who operate inside the designated freeport area can store or manufacture using the imported goods, before exporting again – without ever being subject to customs tariffs or procedures in the UK.  Should the imported goods move out of the freeport zone and into another part of the UK, they will be subject to full import declarations and payment of any customs duties due.  The Inverness & Cromarty Firth Green Freeport site will include the Ports of Inverness, Cromarty Firth and Nigg, along with Inverness Airport. The Firth Green Freeport site will include the ports of Grangemouth, Rosyth & Leith, Edinburgh Airport and a site in Burntisland.

The government anticipates the Green Freeports, based on low-emission industries and fair work practices, will create up to 75,000 high-quality jobs, growth and regeneration in the designated areas whilst contributing towards net zero ambitions.

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Benefits for businesses

Companies can store goods without customs warehouse authorisation – reducing costs and administrative burden.  However, this would likely require links to the Freeport’s inventory system.

Businesses who import goods attracting a high Customs tariff (e.g., food products, textiles and footwear) which are processed in some minor way before being sold on to the EU can avoid the Double Customs Duty cost without having to use expensive Customs Warehousing regimes.

Other taxation benefits include:

• Enhanced rate of Structures and Buildings Allowance at 10%
• Enhanced capital allowance of 100%
• Full relief from LBTT
• Full Business Rates relief
• Employer National Insurance contributions relief

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What are the opportunities?

There will be immediate opportunities for those businesses already operating within the Free Port sites if Duty is currently being incurred on imports, as well as for landlords who may see an uptick in demand for industrial units in those areas, as businesses look to take advantage of the tax reliefs on offer.  It is expected that the Green Freeports will become operational in late 2023.

For importers/manufacturers who are not currently operating within the Free Port areas, consideration should be given to whether there is a benefit to be gained by moving operations to the Green Freeport sites, especially if Duty is being incurred at present.

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