SDLT Freeport relief: what happens when you sell part of the land
Partial sales and SDLT relief
After claiming special tax site relief, selling or leasing part of the land does not end the ongoing test for the part you retain.
- Check the retained land’s real use.
- Commercial rent may support the relief.
- Residential development can trigger withdrawal.
Scroll down for the full analysis.
Read the original guidance here:
SDLT Freeport relief: what happens when you sell part of the land
SDLT Freeport relief: what happens when you sell part of the land
Selling or leasing part of land does not automatically end your SDLT relief. The key question is what happens to the part you keep. If the retained land continues to have a qualifying commercial use, stamp duty relief may remain in place. If it does not, HMRC can take back relief.
What this rule is about
The legislation now calls Freeport and Investment Zone relief special tax site relief, and that relief can reduce SDLT on qualifying non-residential land within a designated site. That is the term used in the legislation.
The relief comes with a control period. In simple terms, the buyer must continue to use the land in a qualifying way during a period after the purchase. Nor does a later part sale end the ongoing check for land you still own.
That distinction can matter a great deal. A buyer may assume that selling one field, unit or plot closes the SDLT position. HMRC’s manual says it does not.
What the official source says
HMRC’s manual explains that the control period continues when a buyer sells only part of the land, leaving an incomplete sale and retained land still subject to the test. For example, someone may buy 1,000 acres and later sell only 500 acres.
It also considers a lease granted from freehold land. The buyer retains the freehold interest, but the tenant has the right to use the leased area. HMRC says the retained interest can remain in qualifying use where the buyer receives rent through a commercial property rental business.
- A part sale does not end the control period for the part retained.
- A lease grant can leave the retained freehold in qualifying use.
- Commercial rent can support that qualifying use.
- The tenant must not develop the land for homes.
- Relief can be withdrawn if the retained interest stops having a qualifying use during the control period.
What this means in practice
You do not necessarily lose relief because your plans change. Letting a factory to a business may be consistent with the relief, rather than a problem.
An arrangement’s commercial-letting label does not settle the point if the rent does not form part of a real commercial rental business, or if someone uses the land for homes.
If HMRC withdraws relief, it can demand the SDLT saved. In the official example, HMRC recovers the whole saving.
- Keep evidence of how each part of the site is used.
- Check proposed leases before they are granted.
- Look at the tenant’s actual use, not only the lease title.
- Review plans for housing development during the control period.
- Consider whether a part sale leaves other land still subject to the ongoing use test.
How to analyse it
Start with the original purchase. Identify the land for which you claimed relief, then map the land later sold or leased. Do not treat the whole site as one block if different areas have different uses.
Next ask a direct question: what is happening on the land you still own? That is the part people can miss.
- Was the original land inside a special tax site?
- Was SDLT relief claimed for all or only part of it?
- Has there been a complete sale, a part sale, or a lease?
- Which land remains under your ownership?
- Is that retained land used for a qualifying commercial purpose?
- If it is leased, is the rent part of commercial rental activity?
- Is any retained or leased land being developed for homes?
- Did the relevant use change during the control period?
Example
HMRC gives the example of a buyer who pays £5,000,000 for 500 acres of non-residential land in a special tax site. Intending to use all of it in a qualifying way, the buyer claims relief on the full £5,000,000 and thereby reduces SDLT from £239,500 to nil. No SDLT remains.
Thirty months later, the buyer grants a lease over a factory and car park on 100 acres. The tenant pays a £1,500,000 premium and annual rent. HMRC says relief can remain available because the buyer receives commercial rent from the retained freehold interest.
Change one fact and the result may change. If the retained interest stops having a qualifying use after those 30 months, or the tenant develops the land for homes, HMRC claws back relief. In its example, a further SDLT return for £239,500 becomes due.
Why this can be difficult in practice
Most disputes will not be about the number of acres. They will be about use. A site may have buildings, storage, open land and future development plots, each with a different story.
You might think a lease is a safe route because the freehold remains with you. It is not safe on that fact alone. The continuing use of the retained interest and the tenant’s use both matter.
- A lease may cover only part of the land originally bought.
- Plans can change after relief is claimed.
- Residential development can be proposed before work starts.
- Documents may describe a commercial purpose more broadly than reality.
- The legislation must be checked alongside HMRC’s manual.
Key takeaways
- A part sale does not end the control period for land you retain.
- Commercial rental income can support qualifying use after a lease grant.
- Housing use or development can lead to SDLT relief being withdrawn.
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 section 61A — special tax site SDLT relief and claims
- FA 2003 Schedule 6C para 2 — land that qualifies for special tax site relief
- FA 2003 Schedule 6C para 3 — uses that count as qualifying commercial use
- FA 2003 Schedule 6C para 8 — when special tax site relief is withdrawn
- FA 2003 Schedule 6C para 10 — partial sales during the control period
- FA 2003 section 81 — further SDLT return after relief withdrawal
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 statutory extract is incomplete for Schedule 6C paragraphs 8 and 10. The current official legislation should be checked before relying on the detailed withdrawal rules.
- Whether rental activity is carried on commercially will depend on the real arrangements and evidence.
- The precise result can depend on which land is retained, how it is used, and when that use changes.
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.
- The plan showing the original land and the part later sold or leased.
- The lease, including the premium, rent and permitted use clauses.
- Records showing how the retained land has been used throughout the control period.
- Evidence of commercial rental activity and the tenant’s actual use.
- Planning and development records, especially where housing development is possible.
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 happens when you sell part of the land [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 section 61A - special tax site SDLT relief and claims https://www.legislation.gov.uk/ukpga/2003/14/section/61A/2025-11-17 - FA 2003 Schedule 6C para 2 - land that qualifies for special tax site 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 8 - when special tax site relief is withdrawn https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/8/2025-11-17 - FA 2003 Schedule 6C para 10 - partial sales during the control period https://www.legislation.gov.uk/ukpga/2003/14/schedule/6C/paragraph/10/2025-11-17 - FA 2003 section 81 - further SDLT return after relief withdrawal https://www.legislation.gov.uk/ukpga/2003/14/section/81/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm20335 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 statutory extract is incomplete for Schedule 6C paragraphs 8 and 10. The current official legislation should be checked before relying on the detailed withdrawal rules. - Whether rental activity is carried on commercially will depend on the real arrangements and evidence. - The precise result can depend on which land is retained, how it is used, and when that use changes. 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 happens when you sell part of the land
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