HMRC SDLT: SDLTM20280 – Freeports and Investment Zones relief – 100% relief

Freeports and Investment Zones Relief – 100% Relief

This section of the HMRC internal manual provides guidance on the 100% relief available for Freeports and Investment Zones. It outlines the principles and concepts related to tax relief for businesses operating within these designated areas.

• Explains eligibility criteria for 100% tax relief.
• Details the application process for businesses.
• Describes the benefits of operating in Freeports and Investment Zones.
• Highlights compliance requirements to maintain relief status.

SDLTM20280 – Freeports and Investment Zones Relief – 100% Relief

Overview of Relief for Land Transactions

When buying land in designated Freeports or Investment Zones, there is a specific relief available that can potentially save a purchaser a significant amount of money. This guidance outlines the conditions under which a purchaser can qualify for this relief.

Qualifying Consideration

To qualify for relief, all the consideration paid for land must meet certain criteria:

– If 90% or more of the consideration is linked to what is known as ‘qualifying land,’ then the entire amount paid can be eligible for relief.
– ‘Consideration’ refers to the total price paid in the land transaction.

This means that even if the value of the non-qualifying land is significant, as long as the majority of the transaction value pertains to qualifying land, the relief can apply.

Defining Qualifying Land

Qualifying land is land that is located within a designated area meant for specific economic activities. These areas are set up to encourage investment and development, which can lead to job creation and economic growth.

Valuing Qualifying Land

To claim relief, it’s essential to value the qualifying land accurately. The valuation must be done on a ‘just and reasonable’ basis. This means that the value attributed to the qualifying land should reflect its true market value and how it is intended to be used.

Example of Qualifying Consideration

Let’s look at a practical example to illustrate how this works:

– Imagine a purchaser buys a total of 25 acres of land for £2,500,000.
– Out of these 25 acres, 20 acres are located within a designated special tax area and will be used for qualifying activities. Therefore, these 20 acres are classified as qualifying land.
– The remaining 5 acres are outside the special tax site and do not qualify for the relief.

Now, let’s consider the valuation of the land:
– The purchaser values the 20 acres of qualifying land at £2,375,000, which is 95% of the total purchase price of £2,500,000.

Since 90% of the total consideration (£2,375,000) is attributed to qualifying land, the purchaser can claim relief on the entire amount paid of £2,500,000. In this scenario, it demonstrates how significant savings can be achieved through careful planning and understanding of the qualifying rules.

Applying for Relief

To access this relief, the purchaser needs to indicate clearly in their stamp duty land tax return that they are claiming relief based on the attributes of the land they have purchased. It’s important to provide the correct information and meet all necessary conditions to ensure success in the application process.

Conditions for Relief

To summarise, the conditions under which relief can be granted are:

– At least 90% of the consideration must be linked to qualifying land.
– The land must be located in a designated Freeport or Investment Zone.
– The valuation of qualifying land must be just and reasonable.

It is the responsibility of the purchaser to ensure all information submitted is accurate and complete.

Further Resources and Information

For more detailed information and step-by-step guidance on this relief, refer to additional HMRC resources online. These resources can provide more clarity on how to navigate the regulations and ensure compliance.

Please consult with tax professionals or legal advisors if there are any uncertainties regarding the eligibility for this relief or the application process, as they can provide tailored advice based on individual circumstances. By understanding the specific requirements, purchasers can make informed decisions and take full advantage of potential financial savings when dealing with land transactions in designated areas.

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