Freeports and Investment Zones: Partial Tax Relief for Qualifying Land Purchases

How partial SDLT relief works for Freeports and Investment Zones

If only part of a land purchase qualifies for Freeports or Investment Zones SDLT relief, you may still get partial relief. The SDLT is first worked out on the full purchase price, then reduced by the same percentage as the amount of the price that is fairly attributable to the qualifying land, as long as that proportion is at least 10% but less than 90%.

• Land being inside a designated special tax site is not enough on its own; the land must also meet the conditions to be treated as qualifying land.
• If only some of the land qualifies, the purchase price must be split between qualifying and non-qualifying land on a just and reasonable basis.
• Where the qualifying share of the consideration is 10% or more but under 90%, the SDLT otherwise due is reduced by that same percentage.
• This relief reduces the tax bill, not the purchase price or the amount on which SDLT is calculated.
• Valuation can be difficult in mixed sites, especially where different parts of the land have different values or different intended uses.

Scroll down for the full analysis.

Freeports and Investment Zones relief: how partial SDLT relief works

This page explains what happens when only part of a land purchase qualifies for Freeports or Investment Zones relief from SDLT. The key point is that if only some of the land is “qualifying land”, the relief may still be available on a partial basis. The amount of tax saved depends on how much of the purchase price is properly attributable to the qualifying land.

What this rule is about

Freeports and Investment Zones relief can reduce SDLT on land bought in a designated special tax site, but not every part of a transaction will necessarily qualify. A purchase may include land that will be used in a qualifying way and land that will not. This rule deals with those mixed cases.

The legislation, as summarised in the HMRC manual, applies a proportionate approach. If the qualifying part is large enough, the SDLT charge is reduced by the same proportion as the qualifying part bears to the whole chargeable consideration.

What the official source says

The official material says that where the proportion of the chargeable consideration attributable to qualifying land is at least 10% but less than 90%, the SDLT otherwise due is reduced by that same proportion.

It also says that chargeable consideration must be attributed to qualifying land on a just and reasonable basis.

HMRC’s example is a purchase of 5 acres, all within the designated special tax site, bought for £250,000 per acre. Although all 5 acres are inside the site, only 4 acres are intended to be used in a qualifying manner. Those 4 acres represent 80% of the purchase price, so the tax is reduced by 80% of the SDLT that would otherwise have been due on the whole purchase.

What this means in practice

Being inside a special tax site is not enough by itself. You also need to identify which land is “qualifying land” for the relief. If only part of the land qualifies, the buyer does not automatically lose relief altogether. Instead, the SDLT reduction may be calculated by reference to the qualifying part.

The practical steps are:

• work out the total chargeable consideration for the transaction;
• identify which part of the land is qualifying land;
• attribute part of the consideration to that qualifying land on a just and reasonable basis; and
• if that attributed amount is 10% or more and below 90% of the total, reduce the SDLT by that same percentage.

This is a reduction of the tax, not a reduction of the purchase price. So the starting point is the SDLT that would have been due on the whole transaction without the relief. The relief then reduces that tax bill by the relevant percentage.

How to analyse it

A sensible way to analyse a mixed transaction is to ask these questions:

• Is the land within a designated special tax site?
• Which parts of the land meet the conditions to be treated as qualifying land?
• Which parts do not qualify because of the intended use or some other condition?
• How should the purchase price be split between the qualifying and non-qualifying land?
• Is that split just and reasonable in the circumstances?
• Does the qualifying proportion fall within the 10% to below 90% range covered by this partial relief rule?

The phrase “just and reasonable basis” matters. It means the price split should reflect the real facts of the transaction, not an artificial allocation designed simply to maximise relief. In some cases, acreage may be a fair basis. In others, it may not be, for example if different parts of the site have very different values.

Example

Illustration: a buyer acquires land for a single price. All of it is within a designated special tax site, but only part of it will be used in a qualifying way. After reviewing the transaction, the buyer concludes that 60% of the total consideration is properly attributable to qualifying land. If that allocation is just and reasonable, the SDLT otherwise due on the whole purchase is reduced by 60%.

This does not mean 60% of the purchase price is ignored for SDLT purposes. It means the tax calculated on the full transaction is reduced by 60%.

Why this can be difficult in practice

The main difficulty is usually valuation and attribution. The legislation, as described by HMRC, requires the consideration to be attributed to qualifying land on a just and reasonable basis. That can be straightforward where each part of the site has the same value. It can be much harder where one part has development potential, access advantages, better location, or other features that make it more valuable than the rest.

Another difficulty is that qualification depends not just on where the land is, but on whether it is intended for use in a qualifying manner. That can be fact-sensitive. If the intended use is unclear, mixed, or changes over time, the analysis may become more difficult.

The manual extract also deals only with the partial relief range where the qualifying proportion is 10% or more and below 90%. It should therefore be read in the wider context of the relief rules as a whole.

Key takeaways

• Partial SDLT relief may be available where only part of the purchased land is qualifying land.
• The tax reduction matches the proportion of the consideration that is attributable to qualifying land, provided that proportion is at least 10% and below 90%.
• The purchase price must be split on a just and reasonable basis, so the factual and valuation analysis is important.

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: Partial Tax Relief for Qualifying Land Purchases

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