Guide on Apportioning Chargeable Consideration for Freeports and Investment Zones Relief

Freeports and Investment Zones relief: apportioning the purchase price

Where only part of a property will be used for a qualifying Freeports or Investment Zones purpose, the relief is worked out by apportioning the chargeable consideration paid for the transaction, not simply by looking at the size of the qualifying area. The split must be made on a just and reasonable basis, supported by evidence, and the actual use must then be monitored during the control period.

• Relief does not automatically apply to the whole purchase price just because part of the site will be used in a qualifying way.
• The key tax question is how much of the price paid properly relates to the qualifying land or buildings.
• A simple area-based percentage will not always be right, because different parts of a site may have different value, use, or development potential.
• HMRC accepts that more than one apportionment method may be valid, including floor space or planning application percentages, if they are just and reasonable in the circumstances.
• Buyers should keep plans, valuations, planning papers, and other records showing intended use and supporting the chosen method.
• After completion, the qualifying use must be monitored during the control period, as relief can be withdrawn if the conditions stop being met.

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Freeports and Investment Zones relief: how to apportion chargeable consideration

This page explains how apportionment works where only part of acquired land or buildings is intended to be used in a qualifying way for Freeports relief or Investment Zones relief. The key point is that the tax analysis focuses on the chargeable consideration paid for the transaction, not simply on how much of the site area falls within a qualifying use.

What this rule is about

Freeports relief and Investment Zones relief depend, among other things, on land or buildings being intended for use in a qualifying manner. In some transactions, only part of the property acquired will meet that test. The question then becomes how much of the consideration paid for the whole transaction should be treated as relating to that qualifying part.

The rule addresses that allocation exercise. It is not enough to identify the qualifying area physically. You must also decide what proportion of the purchase price properly relates to that area, because that is the amount that may qualify for relief.

What the official source says

HMRC’s manual says that it is the chargeable consideration that must be apportioned, not the land area itself. In other words, the tax calculation is based on splitting the price on a just and reasonable basis.

To do that, it is necessary first to identify and measure the parts of the land and buildings that are intended to be used in particular ways. That exercise is needed to work out how much of the consideration, if any, relates to land or buildings intended for qualifying use.

The manual also says:

• the apportionment must be made on a just and reasonable basis
• more than one method may satisfy that test
• possible methods may include percentages used in planning applications, where appropriate, or floor space attributable to the different uses
• other methods may also be accepted, depending on the facts
• each case will be considered on its own merits
• documents supporting the apportionment should be kept with the land transaction return position

The manual further notes that, after the purchase, the actual use of the areas treated as qualifying must be monitored during the control period. That matters because relief can be withdrawn if the conditions for keeping it are no longer met.

What this means in practice

If a buyer acquires a mixed-use site, or a site intended for multiple activities, they cannot assume that relief applies to the whole price just because some part of the property will be used in a qualifying manner.

Equally, they should not assume that a simple land-area percentage will always produce the right answer. A qualifying use occupying 40% of the site does not automatically mean that 40% of the consideration qualifies. Different parts of a site may have different value, utility, development potential, or building intensity.

The practical task is usually in two stages:

1. Identify which parts of the land or buildings are intended to be used in a qualifying manner and which are not.
2. Apportion the consideration paid for the transaction between those parts on a just and reasonable basis.

That means the physical analysis and the valuation-style analysis are linked, but they are not the same thing. Measuring the land or floor space may help, but the legal requirement is to apportion consideration fairly and reasonably.

The buyer should also keep in mind that this is not a one-off filing exercise. If relief is claimed by reference to intended qualifying use, the actual use of the relevant parts must then be monitored during the control period in case a withdrawal provision is triggered.

How to analyse it

A sensible way to approach the issue is to ask the following questions:

1. What exactly was acquired in the transaction: bare land, existing buildings, or a mix?
2. Which specific parts are intended to be used in a qualifying manner?
3. Which parts are intended for other uses, or are not clearly within the qualifying use test?
4. How have those parts been identified and measured?
5. What method best allocates the price paid between the qualifying and non-qualifying parts on a just and reasonable basis?
6. What evidence supports that method?
7. How will the actual post-completion use be monitored during the control period?

Evidence may include plans, planning materials, floor-space schedules, transaction documents, internal project documents, and any other material showing intended use and supporting the chosen basis of apportionment.

The source material specifically mentions planning application percentages and floor space as possible methods. That does not make them mandatory. The question is whether, in the facts of the case, the chosen method gives a just and reasonable result.

Example

Illustration: a company buys a site containing several buildings. It intends to use one building and part of the surrounding land for a qualifying activity, while the rest of the site will be used for non-qualifying purposes. The company cannot simply claim relief by taking the percentage of the total site area that falls within the qualifying use. Instead, it must identify the relevant parts and then apportion the purchase price on a just and reasonable basis.

If floor space is a sensible indicator of relative value and use in that case, it may use floor space. If planning documents provide a more reliable split between intended uses, those may be used instead. The important point is that the amount relieved must reflect a fair allocation of the consideration, supported by evidence.

Why this can be difficult in practice

The phrase just and reasonable gives flexibility, but it also creates judgement calls. More than one method may be acceptable. That means there may not be a single mechanically correct answer.

Difficulties often arise where:

• different parts of the site have very different value, even if their area is similar
• buildings and open land are being used together in a way that is not easy to separate
• the intended use at completion is still developing or depends on later project decisions
• planning material does not match the commercial reality of how the property will actually be used
• the buyer has good evidence of intended qualifying use at the outset, but later use changes during the control period

The source material does not prescribe a hierarchy of methods. So the strength of the analysis will usually depend on whether the buyer can show that the chosen method fits the property, the intended use, and the economics of the transaction.

Key takeaways

• For Freeports and Investment Zones relief, the amount to be apportioned is the chargeable consideration, not just the physical area of the site.
• The apportionment must be made on a just and reasonable basis, and more than one method may be acceptable.
• Keep clear evidence for the method used and monitor actual use during the control period, because relief may later be withdrawn.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Apportioning Chargeable Consideration for Freeports and Investment Zones Relief

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