HMRC SDLT: SDLTM20205 – Freeports and Investment Zones relief: general

Freeports and Investment Zones Relief: General Principles

This section of the HMRC internal manual provides guidance on the relief available for Freeports and Investment Zones. It outlines the principles and concepts related to tax incentives aimed at encouraging economic growth in designated areas.

• Freeports offer tax reliefs to stimulate trade and investment.
• Investment Zones provide similar benefits to foster economic development.
• Both initiatives are designed to create jobs and boost local economies.
• Eligibility criteria and application processes are detailed within the manual.

Freeports and Investment Zones SDLT Relief: General Guidance

What is SDLT Relief?

Relief from Stamp Duty Land Tax (SDLT) is available when you purchase land or buildings in specific areas known as Freeports and Investment Zones. These areas are designated as ‘special tax sites’ under the Finance Act 2003.

Key Features of SDLT Relief

– Statutory Basis: This guidance refers to Schedule 6C of the Finance Act 2003.
– Definition of Land: In this context, ‘land’ includes buildings when relevant.
– Time Period for Relief:
– For Freeport tax sites: Relief applies from the date the site is designated until 30 September 2031.
– For Investment Zone tax sites: Relief applies until 30 September 2034.

You can find detailed information about the specific tax sites on the official government website, GOV.UK.

Qualifying for Relief

To qualify for relief, the land must be:
– Purchased with the intention to use it in a specific way that meets the qualifying criteria.
– Actually used in this qualifying manner throughout a control period.

Example: If you buy a piece of land intending to develop a factory, it must be used as a factory during the control period to maintain relief.

What Does Not Qualify for Relief?

– Payments made for items that are not considered land, such as chattels, will not qualify for SDLT relief as these transactions are not subject to SDLT.

Example: If you buy machinery along with a piece of land, only the payment for the land will be eligible for relief. The expense for the machinery is separate and does not affect the SDLT relief status.

Flexibility in Use of Land

Once relief is claimed, the way the land is used that did not qualify for relief does not impact the land that did qualify.

Example: If you own two plots of land, one that qualifies for relief (used as an office) and another that doesn’t (used for residential development), you can freely use the residential plot without affecting the relief on the commercial property.

Types of Land Eligible for Relief

Relief can be claimed regardless of whether the land is:
– Residential
– Non-residential
– Mixed-use

The key factor is not the type of land at the time of purchase, but rather how it is intended to be used and how it is actually used.

Joint Purchasers and SDLT Relief

Joint purchasers can benefit from the same relief as individual purchasers. Each purchaser must have an intention that meets the qualifying criteria, but not all purchasers are required to have the same intended use.

Example: If two people buy a piece of land intending to use one part as a warehouse and the other part for office space, both uses can qualify for relief as long as both intentions meet the qualifying criteria.

Withdrawal of Relief

If at any time during a control period the qualifying land is no longer used in a qualifying manner by any of the purchasers, the relief can be withdrawn.

Special Rules for Alternative Finance Arrangements

– When using alternative finance methods, the relief eligibility is based on the ‘relevant person,’ who is the individual apart from the financial institution involved in the arrangement.
– If relief is withdrawn, the responsibility for any tax owed falls on the ‘relevant person.’

How to Claim SDLT Relief

To claim the relief, it must be included in your SDLT return as specified in section 61A(4) of the Finance Act 2003.

– Claim Submission Deadlines:
– For Freeport tax sites: Claims must be submitted by 14 October 2032.
– For Investment Zone tax sites: Claims must be submitted by 14 October 2035.

These deadlines are crucial to ensure that your claim for relief is recognised and valid under the terms outlined in the Finance Act 2003.

Further Information

For a complete understanding of Freeports and Investment Zones and how they apply to your situation regarding SDLT relief, it is recommended to keep checking updates on the designated tax sites and any guidance published on GOV.UK. This resource will keep you informed about changes or additional requirements related to SDLT relief in special tax sites.

Remember, this information can be complex, and regulations may change, so it’s important to stay up to date with HMRC guidelines to fully understand your eligibility and obligations. Using professional advice or consulting with tax professionals can also help navigate these regulations more effectively.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM20205 – Freeports and Investment Zones relief: general

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