Green Freeports are places where business can be carried out inside a country’s land border, but where the normal tax and customs rules don’t apply in full. They have boundaries agreed with both the UK government and Scottish government.

They contain two types of sites where special rules apply, which can overlap. These are called ‘tax sites’ and ‘customs sites’. Companies can choose to locate themselves so that they profit from the benefits offered by one of these site types, or a combination of both.

Green Freeports are intended to stimulate economic activity in their designated areas. The main intention is to attract inward investment to build new facilities such as manufacturers or research and development facilities which bring jobs to an area, taking advantage of the incentives available inside the Green Freeport area.

We will be, but there is another stage to go through in order to bring Inverness and Cromarty Firth into an operational Green Freeport.  This process involves working with both the Scottish government and UK government on a business case, and legalities to establish tax and customs sites and us expected to take around 12 months to complete.

The consortium which worked together to deliver the successful bid is currently formalising the next steps. It created an independent company limited by guarantee which will run Inverness and Cromarty Firth Green Freeport, with a Board made up of a mixture of the public, private and academic partners.

A Chair has been appointed and the board are currently seeking to appoint a Managing Director.

The Green Freeport and the tax and customs incentives attached to it will attract new investors into the area; many of whom will need services, expertise and/or technologies from the local supply chain. This is already starting and the main sectors surrounding these investments are offshore wind and green hydrogen.  Following the announcement, some other connected sectors are now starting to enquire about setting up in the Highlands.

We will be able to share more about this as details emerge and become public – many of these discussions are kept commercially confidential in their early stages.

Businesses will also benefit from the general uplift in economic activity in the area catalysed by the Green Freeport. They will also benefit from the expected increase in the labour force and from the training that will be delivered in the area to help people ensure they are ready for these new jobs.

(In our Green Freeport, the National Insurance tax reliefs offered by the Governments will be reinvested into a training fund to provide skills and training for local people. This will be delivered via The PowerHouse project.)

Green Freeport status unlocks various tax incentives for businesses, encouraging them to set up facilities in the Highlands.  For example:

• Land & Building Transaction Tax (LBTT) Relief.
• Enhanced Structures & Buildings Allowance (SBA): accelerated relief to reduce taxable profits by 10% of cost of investment every year for 10 yrs (compared to standard 3%p.a. over 33 1/3 yrs).
• Enhanced Capital Allowances (ECA): reduce taxable profits by full cost of qualifying investment in new plant/machinery in same tax period as cost was incurred.
• Employer NICS: 0% employer NICs on salaries of any new employee working in Green Freeport tax site. Applicable for <3 yrs per employee on earnings <£25,000p.a. threshold. NICs to be reinvested in training fund for our Green Freeport to prevent local displacement and incentivise training
• Non Domestic Rates Relief (NDRR): Businesses may be eligible for <100% relief from NDR on certain properties and property improvements within tax sites for <5 yrs from point of first relief.

Any growth in non-domestic rates over an agreed baseline will be retained by the Highland Council for the next 25 years and available for reinvestment within the Freeport boundary. It is hoped this will create a positive cycle of sustainable reinvestment; creating jobs and economic growth for decades and building on the initial few years of the Freeport status.

There are also customs benefits for companies importing / exporting materials or components via the customs sites that will be established within the Freeport. These include simplified customs procedures and cashflow benefits surrounding the payment of duty and/or VAT on components which are imported and re-exported. We are working hard with HMRC and the UK’s customs departments to better understand how these will operate in reality and will share more details in due course.

Employees are classed as working within a Freeport tax site if they spend at least 60% of their working hours within that tax site. 

Inside a customs site, port operators and other companies are able to defer tax duty and import VAT on goods. If a product comes from outside of the UK into the customs site, such as a raw material or a component part, no tax is paid on that coming into the port unless it then leaves the port area and enters the UK.

If a manufacturer or a producer is located inside a customs site, it can handle those goods and use them to create their finished product.

They would only pay tax on their product if it then enters the UK. They can export to an international market without paying tax.

This could create a competitive advantage for Scotland versus producing goods abroad.

The National Insurance Contribution Reliefs will be reinvested in the Inverness and Cromarty Firth Green Freeport into a training and skills development fund through The Powerhouse. This was important to the regional consortium who delivered the bid, as we didn’t want local businesses outside the Freeport fence to be at a disadvantage to those within in terms of wages paid. It is also part of the Fair Work pledge the Scottish Government pressed for in Green Freeports.

The idea is to give the local people the skills they need to find a job in the region’s renewables industry, delivering benefits to the local economy and strengthening local communities with green secure jobs.

Our initial socio-economic impact analysis suggested that the region could expect 15,000 new jobs and around £2.5bn in inward investment from Green Freeport status over the coming years. This could reverse generations of depopulation and reinvigorate our region, through providing exciting, green careers for our working age population and for youngsters who will start their first jobs in the next 10-20 years.

We have already seen an increase in enquiries from companies wanting to establish facilities in our region; mainly those based abroad who want to service the renewables sector.  This is new activity to Scotland and some is new activity to the UK.  We have also seen local companies planning expansions and investments based on the announcement. One thing the consortium was very focused on was delivering new jobs and growth wherever possible, rather than simply moving or displacing activity from elsewhere in Scotland.

Green Freeport status has already put the Highlands on the map. We beat very strong competition from Glasgow and Aberdeen and the Prime Minister, Rishi Sunak, announced the award himself. This was on his first official visit to Scotland, when he flew into Inverness and came to visit Port of Cromarty Firth’s facilities in Invergordon. Many people in positions of power across our country didn’t know where Inverness and the Cromarty Firth was when we started this process. Many are now visiting the area, as we move into the set up phase of the Freeport.

As a renewables hub Inverness and the Cromarty Firth will play a key role in regeneration and green job creation. We will be at the centre of delivering net zero for our country, through the support of the offshore wind and green hydrogen sectors. Encouraging innovation and creating an environment to attract new business.

There will be a “ripple effect” of indirect jobs provided by small start-up companies to supply and service all that is happening. People developing technology and expertise will, in the medium and longer term, be able to export these products and skills to help other countries decarbonise.

It really is an exciting time to be in the Highlands!

Economic analysis carried out as part of developing the bid found that the Inverness and Cromarty Firth Green Freeport could create more than 15,000 good-quality well paid jobs over the next 10 years in the Highlands with a further 10,000 jobs across Scotland and the UK.

This would reverse generations of depopulation; offering jobs to our youngsters who may not want to leave the area for work, encouraging others to come home, and attracting people from other parts of the UK who want to raise their families in this beautiful part of the world.

The focus of the consortium has been to secure year-round work opportunities where possible. This would reduce the region’s reliance on a mobile workforce and encourage people to live and work in the area; raising their families here and spending their wages with local businesses.

Local business people will benefit from an expected 50-70 year pipeline of offshore wind construction, operations, maintenance and repowering. This will provide business opportunities, secure jobs and also enable local companies to develop technologies and expertise that can be exported to other countries. Freeport status will build on this pipeline; attracting support services and new manufacturing facilities, which will require services and support from the local supply chain.

By supporting the offshore wind and green hydrogen sectors, we are ensuring local communities have access to clean, secure energy for the future. Also that we play a central role in Scotland and the UK achieving the net zero targets and protecting regions such as ours from future climate change. Our Green Freeport has clean energy at its heart and is aligned to other government initiatives such as Climate Action Towns.