Freeports and Investment Zones: Relief for Land Outside Tax Sites Explained

Freeports and Investment Zones SDLT relief for land partly outside a tax site

Where a land purchase includes land both inside and outside a designated Freeport or Investment Zone special tax site, SDLT relief does not automatically apply to the outside land. HMRC’s view is that relief for the part outside the tax site is only available if the transaction meets the separate test for full, or 100%, relief.

• These reliefs are mainly aimed at qualifying land within a designated special tax site.
• If one transaction includes land inside and outside the site, the SDLT treatment may need to be split by location.
• Land outside the tax site only qualifies for relief if the whole transaction meets the 100% relief test.
• If that full-relief test is not met, the consideration linked to land outside the site will not qualify just because it is part of the same deal.
• In practice, buyers should check site boundaries carefully and work out how much of the price relates to land inside and outside the tax site.
• This can be difficult where boundaries are unclear, the price must be apportioned, or the wider rules on 100% relief are uncertain.

Scroll down for the full analysis.

Freeports and Investment Zones relief: when some of the land is outside the tax site

This page explains a narrow but important point about SDLT relief for Freeports and Investment Zones. The issue is what happens if a land transaction includes land both inside and outside a designated special tax site. The official HMRC material says relief for the part outside the tax site is only available if the transaction satisfies the test for full, or 100%, relief.

What this rule is about

Freeports relief and Investment Zones relief are tied to the location of the land. In general, the relief is aimed at qualifying land in a designated special tax site. A practical problem arises where a single transaction covers a larger area and only part of that area falls within the relevant tax site boundary.

The legal question is whether SDLT relief can extend to the consideration attributable to land outside the special tax site, or whether relief is confined to the part inside it.

What the official source says

The HMRC manual states that relief for consideration attributable to transaction land outside a special tax site is only available if the transaction meets the test for 100% relief. It refers to the separate guidance on that test.

So the official position is not that outside land automatically qualifies. The starting point is the opposite: if part of the land is outside the special tax site, relief for that outside part is only possible where the transaction falls within the rules for full relief.

What this means in practice

If a buyer acquires land under one transaction and some of that land lies outside the designated tax site, the SDLT treatment may need to be split by reference to location.

In practical terms, there are two broad possibilities:

• if the transaction satisfies the conditions for 100% relief, relief may extend to the consideration attributable to the land outside the special tax site as well as the land inside it;
• if the transaction does not satisfy that full-relief test, the part of the consideration attributable to land outside the special tax site will not qualify for relief merely because it is included in the same deal.

This matters because land transactions often do not follow tax site boundaries neatly. A purchase might include access land, service land, landscaping strips, or adjoining parcels that fall outside the designated area. The SDLT result may therefore depend not just on what is being bought, but exactly where each part of it is situated and whether the transaction reaches the threshold for full relief.

How to analyse it

A sensible way to approach this issue is:

• identify all the land included in the transaction;
• check which parts are inside the relevant special tax site and which parts are outside it;
• consider how much of the total consideration is attributable to each part;
• ask whether the transaction meets the separate test for 100% relief referred to in HMRC’s guidance;
• if it does not, proceed on the basis that relief for the outside land is not available under this rule.

This analysis is important because the rule is framed by reference to the consideration attributable to land outside the special tax site. That means the allocation of consideration can matter in mixed-location transactions.

Example

Suppose a company buys a development site in a single transaction. Most of the site is within a designated special tax site, but a small adjoining strip used for access is outside it. If the transaction meets the test for 100% relief, HMRC’s guidance indicates that relief can be available for the consideration attributable to the outside strip as well. If the transaction does not meet that full-relief test, the consideration attributable to the strip outside the tax site would not qualify under this rule.

Why this can be difficult in practice

The HMRC text on this page is brief and depends on the separate rules for 100% relief. That means this point cannot be analysed in isolation.

Difficulties may arise in at least three areas:

• boundary issues, where it is not straightforward to determine whether all of the land falls within the designated special tax site;
• apportionment issues, where a transaction covers land both inside and outside the site and the consideration must be attributed between them;
• qualification issues, because relief for outside land turns on whether the transaction satisfies the distinct test for full relief.

The source material here does not itself explain the 100% relief test, so the answer will depend on the wider Freeports or Investment Zones relief rules and the facts of the transaction.

Key takeaways

• Land outside a special tax site does not qualify for relief automatically just because it is bought in the same transaction as land inside the site.
• Relief for the consideration attributable to outside land is only available if the transaction meets the test for 100% relief.
• In mixed-location transactions, site boundaries and the attribution of consideration can be critical.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Freeports and Investment Zones: Relief for Land Outside Tax Sites Explained

View all HMRC SDLT Guidance Pages Here