This Q&A answers some common questions about the tax reliefs available to businesses and organisations investing in the Forth Green Freeport and/or the Inverness and Cromarty Firth Green Freeport tax sites.
What tax reliefs are available for investment in the green freeports ?
The tax reliefs include enhanced capital allowances, a relief from Employer's National Insurance Contributions, a relief from the Land and Buildings Transaction Tax (LBTT) and an exemption from non-domestic (business) rates. All of these will only be available for investment in the tax sites within the green freeports, not for investment in the wider green freeport area, and only once the tax sites have been designated. Brief details are below, though there are other detailed conditions that need to be met.
Are the tax reliefs available now ?
Not yet – they will only be available once the tax sites have been "designated" by UK Government statutory instruments, which will include detailed plans of the tax sites. These are expected to be issued in spring 2024 once the Outline Business Cases for each green freeport have been approved by the Scottish and UK Governments.
How does the LBTT green freeport relief work?
Expenditure on the purchase or lease of qualifying non-residential land and buildings in a green freeport tax site will be exempt from LBTT. That LBTT relief however, can be clawed back if the property ceases to meet the conditions within three years of the purchase or lease.
What enhanced capital allowances will be available ?
Businesses will be able to claim 100% tax relief (capital allowances) on expenditure on new plant and machinery for use primarily for trading activities in a green freeport tax site. That can be withdrawn if the plant and machinery ceases to be used for those purposes within five years. Claims can also be made for an enhanced 10% structures and buildings allowances for expenditure incurred on qualifying buildings in a designated green freeport tax site before 30 September 2026 (though that date is expected to be extended to 30 September 2031).
Who can claim NIC relief ?
Employers who have business premises in one of the green freeport tax sites will be able to claim an exemption from paying National Insurance contributions on the first £25,000 of the salary of new employees who spend at least 60% of their time working in the green freeport tax site. The relief can be claimed for the first 36 months of a new employee's employment, which must have started between 6 April 2022 and 6 April 2026 (though the end date is expected to be extended to 2031).
How long will the tax reliefs be available for?
The current time period for the tax reliefs is five years from when the tax sites are designated, however the UK Government has indicated that this time period is to be extended to 10 years. The Scottish Government is expected to make a similar five-year extension to the time period for LBTT relief.
What relief will be available from business rates?
Relief from non-domestic (business) rates is expected to be available for businesses occupying properties within the green freeport tax sites.
Contributor
Director of Corporate Tax
