SDLT Freeport relief: what counts as qualifying use?
Qualifying use for SDLT Freeport relief
Commercial trade, development and some rental activity can count. Residential use cannot.
- Connected people can use the land
- Commercial means profit-focused
- Some rents are excluded
Scroll down for the full analysis.
Read the original guidance here:
SDLT Freeport relief: what counts as qualifying use?
For Freeport and Investment Zone stamp duty relief, the planned use of the land matters. Commercial work, development and some rental activity can count. A home, or its garden, cannot count for that part of the land.
What this rule is about
This SDLT relief covers land in a special tax site. One key condition is that, on the relevant date, you intend to use the whole site only in a qualifying manner.
That sounds simple. It is not always simple, because the law gives special meanings to several everyday terms.
This page explains those meanings. It does not decide whether every other condition for the relief has been met.
What the official source says
HMRC’s manual points to the definitions that support the qualifying-use test, setting out the terms that must be applied when deciding whether the intended use qualifies. Those definitions matter. The legislation allows several types of commercial use to qualify, whether the land is used by you directly or by someone connected with you under the relevant rules. Both routes matter.
- A connected person has the meaning in Corporation Tax Act 2010 section 1122.
- Commercial means carried on commercially and with a view to profit.
- Excluded rents have the meaning given for the Annual Tax on Enveloped Dwellings.
- For this purpose, a property rental business has the meaning in Part 3, Chapter 2 of the Income Tax Act 2005, wherever that definition applies. That definition controls.
- Commercial use can involve a trade or profession.
- It can also involve developing or redeveloping land for commercial use.
- It can include rental income or other receipts, unless they are excluded rents.
- Where land is used as a home, or as the garden or grounds of that home, it does not count for the qualifying-use test to that extent. That area is out.
What this means in practice
Do not look only at your own business. The test can also look at what a connected person will do with the land. That may include a company, family member or other person, depending on the detailed connection rules.
Equally, calling an activity commercial will not settle the point. It needs a real commercial basis and a plan to make a profit.
- Check who will occupy, develop or let the land.
- Check whether that person has a connection with you.
- Match each planned use to trade, development or rental income.
- Separate any area intended for a home or its garden.
- Check the exact nature of rental income before treating it as qualifying.
How to analyse it
Start with the land itself. Then work through the intended use area by area. The word “exclusively” matters, so a mixed plan needs particular care.
- Is the land in a special tax site on the relevant date?
- What use do you intend for every part of it?
- Will you or a connected person carry on a trade or profession there?
- Will you develop the land for commercial use?
- Will the land produce rents or other receipts?
- If so, do any receipts fall within the excluded-rents definition?
- Does any part serve as a home, garden or grounds?
- What documents show the plan at the relevant date?
Example
Maya buys land in a special tax site. Her plan is to redevelop all of it as workshops, then let the workshops to local firms as part of a profit-making business. Because the test can cover development for commercial use and qualifying rental activity, Maya’s planned redevelopment and letting may both fall within its scope. Both uses matter.
Now change one fact. Maya keeps one corner as the garden for a flat. That corner does not count as qualifying use. The wider effect on relief depends on the full statutory conditions and the facts.
Why this can be difficult in practice
The difficult questions often sit behind ordinary words. Who is connected with whom? Is the activity truly commercial? Are the rents excluded? The source does not give short answers to those questions.
HMRC links to its own guidance on each area. Although HMRC’s guidance can explain its approach and may assist when the terms are applied, it is not the law and cannot replace the statutory definitions. The definitions remain controlling.
- A business plan may show an intention, but it must cover all of the land.
- Rental income does not automatically pass the test.
- A small residential area can still matter because the test works by area.
- Company ownership or family links may make the connected-person question important.
- The supplied source does not list the rents that the law excludes.
Key takeaways
- Qualifying use must be commercial and profit-focused.
- Use by a connected person can count.
- Homes, gardens and grounds do not count.
- Check rental income against the excluded-rents definition.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 6C para 2 — land and intended use needed for relief
- FA 2003 Schedule 6C para 3 — uses that count as qualifying commercial use; home use excluded from qualifying use; definitions used in the qualifying use test
- FA 2003 Schedule 6C para 4 — connected person meaning for this relief
- an Act of 2010 we do not have an identifier for section 112 — when people and businesses are connected (no link: an Act of 2010 we do not have an identifier for)
- FA 2013 section 133 — meaning of excluded rents for this test
- Income Tax (Trading and Other Income) Act 2005 Part 3 Chapter 2 — meaning of a property rental business (could not parse a provision)
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The supplied material does not list the types of rent that are excluded rents.
- Whether people or businesses are connected depends on the detailed statutory test.
- The supplied statutory copy records changes only through 17 November 2025. Current-law verification is needed for transactions or advice after that date.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- A plan showing the land bought and the proposed uses across it.
- Evidence that the site falls within a special tax site.
- Business plans, contracts or planning material supporting the intended commercial use.
- Rental terms and income details where the plan involves letting.
- Ownership and control records where a connected person will use the land.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION SDLT Freeport relief: what counts as qualifying use? [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 6C para 2 - land and intended use needed for relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/2/2025-11-17 - FA 2003 Schedule 6C para 3 - uses that count as qualifying commercial use https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/3/2025-11-17 - FA 2003 Schedule 6C para 3 - home use excluded from qualifying use https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/3/2025-11-17 - FA 2003 Schedule 6C para 3 - definitions used in the qualifying use test https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/3/2025-11-17 - FA 2003 Schedule 6C para 4 - connected person meaning for this relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/4/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - when people and businesses are connected - FA 2013 section 133 - meaning of excluded rents for this test https://www.legislation.gov.uk/ukpga/2013/29/section/133 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm20230 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The supplied material does not list the types of rent that are excluded rents. - Whether people or businesses are connected depends on the detailed statutory test. - The supplied statutory copy records changes only through 17 November 2025. Current-law verification is needed for transactions or advice after that date. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: SDLT Freeport relief: what counts as qualifying use?
Search Land Tax Advice with Google
