No Tax Relief for Transactions with Less Than 10% Qualifying Land

When Freeports or Investment Zones SDLT Relief Is Blocked by the 10% Rule

Freeports and Investment Zones SDLT relief is completely denied if the part of the purchase price attributable to qualifying land is less than 10% of the total chargeable consideration. This applies even where some of the land is in a special tax site and is intended for a qualifying use, so the key issue is value allocation rather than acreage alone.

• The rule applies where only part of a transaction involves qualifying land in a designated special tax site.
• If the chargeable consideration attributable to qualifying land is under 10% of the total purchase price, no relief is available at all.
• The test looks at the value attributed to qualifying land, not simply how much land by area is qualifying.
• A mixed purchase can therefore fail for relief even if some land is within the special tax site and intended for qualifying use.
• Valuation can be difficult in practice, especially where the contract gives a single price for land with different locations, uses or development values.
• Buyers and advisers should identify the qualifying land, attribute the correct share of the consideration to it, and check whether it reaches the 10% threshold.

Scroll down for the full analysis.

When Freeports or Investment Zones relief is blocked because too little of the purchase price relates to qualifying land

This page explains a narrow but important limit on Freeports and Investment Zones relief for SDLT. Even if part of a purchase includes land in a special tax site and that land is intended for a qualifying use, no relief is available at all if too little of the total purchase price is attributable to that qualifying land. The key threshold is 10%.

What this rule is about

Freeports and Investment Zones relief can apply to land acquired in a designated special tax site, but not every mixed purchase qualifies. The rule in the official material deals with transactions where only part of what is bought is “qualifying land”.

The legislation looks at the proportion of the transaction’s chargeable consideration that is attributable to qualifying land. If that proportion is less than 10% of the total chargeable consideration for the transaction, the relief is denied altogether.

This matters where a buyer acquires a larger site and only a small part of it falls within the special tax site, or only a small part is intended for qualifying use.

What the official source says

The official source states that no relief is given where the proportion of chargeable consideration attributable to qualifying land is less than 10%.

It gives an example of a purchase of 100 acres for £7,500,000. Only 3 acres are inside the designated special tax site. All 3 acres are intended for use in a qualifying manner, so they count as qualifying land. Those 3 acres are valued at £500,000, which is 6.7% of the total consideration. Because that is less than 10%, no relief is available for the purchase.

The important point is that the rule is not asking only whether there is some qualifying land in the transaction. It asks whether the amount of consideration attributable to that qualifying land reaches the 10% threshold.

What this means in practice

A transaction can fail even where:

• part of the land is within a special tax site, and
• that part is intended for a qualifying use.

If the value, and therefore the chargeable consideration attributable to that qualifying land, is less than 10% of the total consideration for the whole transaction, there is no relief.

This is an all-or-nothing threshold. On the source material provided, the result is not a partial restriction of relief. Instead, the transaction gets no relief at all.

In practical terms, this means buyers and advisers need to look carefully at how much of the total purchase price is properly attributable to the qualifying land. A small qualifying area within a much larger acquisition may not be enough, especially if the qualifying part has relatively low value.

How to analyse it

A sensible way to approach the issue is:

• Identify the land acquired in the transaction.
• Work out which part of that land is “qualifying land”. From the source material, this requires that the land is inside the special tax site and intended for use in a qualifying manner.
• Determine how much of the chargeable consideration is attributable to that qualifying land.
• Compare that figure with the chargeable consideration for the transaction as a whole.
• If the attributable amount is less than 10% of the total, no relief is available.

The focus is on chargeable consideration attributable to qualifying land, not simply acreage. Area may help explain the facts, but the test is based on consideration, which in practice means value allocation matters.

Example

Illustration: A buyer acquires a mixed site for £4,000,000. A small parcel within the site is inside the designated special tax site and is intended for a qualifying use. If that parcel is properly attributable with £300,000 of the total consideration, it represents 7.5% of the total transaction value. On the rule described in the source, no Freeports or Investment Zones relief would be available, because the qualifying land accounts for less than 10% of the chargeable consideration.

Why this can be difficult in practice

The main difficulty is valuation. The rule depends on the proportion of chargeable consideration attributable to qualifying land, so the outcome may turn on how the purchase price is allocated across different parts of the site.

This can be fact-sensitive where:

• the transaction covers land both inside and outside the special tax site,
• only some land is intended for qualifying use,
• different parts of the site have very different development potential or market value, or
• the contract price is a single global amount for the whole acquisition.

The source material does not set out a detailed valuation method. It only makes clear that the relevant comparison is between total chargeable consideration and the portion attributable to qualifying land. That means the analysis may require careful evidence on valuation and land use.

Another potential misunderstanding is to assume that any qualifying land is enough to unlock at least some relief. The source points the other way: where the attributable consideration is below 10%, there is no relief.

Key takeaways

• Freeports and Investment Zones relief is not available if less than 10% of the transaction’s chargeable consideration is attributable to qualifying land.
• The test is based on attributable consideration, not just the size of the qualifying area.
• A mixed purchase can fail entirely even if some land is in the special tax site and intended for qualifying use.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: No Tax Relief for Transactions with Less Than 10% Qualifying Land

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