Guidance on LBTT Tax Relief for Land Transactions Involving Friendly Societies

LBTT relief for land transfers linked to friendly society reorganisations

A full relief from Land and Buildings Transaction Tax may apply in Scotland where land is transferred because of a qualifying statutory amalgamation or transfer of engagements involving a friendly society. The relief is narrow and only applies if the land transaction is directly caused by, or happens as a result of, one of the specific reorganisation procedures set out in the Friendly Societies Acts.

• The relief gives a full LBTT exemption, so no tax is charged if the statutory conditions are met.
• It applies only to certain formal amalgamations or transfers of engagements under specified provisions of the Friendly Societies Act 1974 and the Friendly Societies Act 1992.
• It is not enough that a friendly society is involved; the property transfer must be effected by, or in consequence of, the qualifying reorganisation.
• A normal commercial sale or separate property transfer will not qualify just because a friendly society is a party.
• In practice, advisers should check the society’s status, the exact statutory procedure used, and whether the land transfer is clearly linked to that process.

Scroll down for the full analysis.

LBTT relief for land transactions involving friendly societies

This page explains a narrow LBTT relief for land transactions connected with certain formal reorganisations of friendly societies. If the transaction falls within the statutory conditions, the relief is full, so no LBTT is charged on that land transaction.

What this rule is about

Land and Buildings Transaction Tax applies to chargeable land transactions in Scotland unless an exemption or relief applies. This relief is aimed at situations where land changes hands because friendly societies are being reorganised under the statutory procedures in the Friendly Societies Acts.

The policy point is straightforward. Where land is transferred as part of a qualifying amalgamation or transfer of engagements between friendly societies, the legislation allows that transfer to take place without an LBTT charge.

For this purpose, a “friendly society” takes the meaning used in section 116 of the Friendly Societies Act 1992. The source material says this means an incorporated friendly society or a registered friendly society.

What the official source says

The official guidance says that full relief is available where a land transaction is effected by, or in consequence of, one of the following:

• an amalgamation of two or more registered societies under section 82 of the Friendly Societies Act 1974
• an amalgamation of two or more friendly societies under section 85 of the Friendly Societies Act 1992
• a transfer of engagements between registered societies under section 82 of the Friendly Societies Act 1974
• a transfer of engagements between friendly societies under section 86 of the Friendly Societies Act 1992
• a transfer of the engagements of a friendly society under a direction of the appropriate authority under section 90 of the Friendly Societies Act 1992

The guidance also points out that:

• “appropriate authority” has the meaning given by section 119(1) of the Friendly Societies Act 1992
• “registered”, in relation to a friendly society, has the meaning given by section 111 of the Friendly Societies Act 1974

The relief is provided by schedule 13A to the Land and Buildings Transaction Tax (Scotland) Act 2013, inserted by the Land and Buildings Transaction Tax (Addition and Modification of Reliefs) (Scotland) Order 2015.

What this means in practice

The key practical question is not simply whether a friendly society is involved. The land transaction must arise from a specific type of statutory reorganisation listed in the legislation.

In practice, that means you should ask:

• Is the entity a friendly society within the statutory meaning?
• Is there a formal amalgamation or transfer of engagements under one of the cited provisions?
• Was the land transaction effected by that event, or did it happen in consequence of it?

If the answer to all of those questions is yes, the transaction may qualify for full relief.

The phrase “effected by or in consequence of” matters. It suggests that the relief is not limited to the immediate legal step that carries out the amalgamation or transfer. It can also cover a land transaction that happens because of that qualifying event. But the connection still needs to be real and legally grounded. A separate property transfer involving a friendly society does not qualify just because it happens around the same time.

The practical consequence is that conveyancers and tax teams should look closely at the reorganisation documents. The land transfer should be traceable to the statutory amalgamation or transfer of engagements, rather than being an independent commercial disposal or acquisition.

How to analyse it

A sensible way to analyse the relief is to work through the following points.

• Identify the parties. Confirm that the body involved is a friendly society within the statutory definition.
• Identify the legal mechanism. Check whether the reorganisation is being carried out under one of the provisions specifically listed in the guidance.
• Identify the land transaction. Work out exactly what land interest is being acquired and by whom.
• Test the connection. Ask whether the land transaction is effected by the qualifying amalgamation or transfer, or follows from it as a consequence.
• Check whether the transfer is part of the statutory process rather than a separate arrangement.
• Make the claim correctly in the LBTT return, following Revenue Scotland’s return guidance.

This framework is important because the relief is targeted. It is not a general relief for all transfers involving mutual organisations or member-based bodies.

Example

Illustration: Two friendly societies formally amalgamate under the relevant Friendly Societies Act procedure. As part of that amalgamation, land in Scotland held by one society passes to the successor body. If that land transaction is effected by, or occurs in consequence of, the statutory amalgamation, the guidance indicates that full LBTT relief can be claimed.

By contrast, if a friendly society later sells an unrelated property as a normal commercial sale, that is not within this relief merely because the seller is a friendly society.

Why this can be difficult in practice

The main difficulty is usually the link between the land transaction and the statutory event.

The source material gives the categories of qualifying reorganisation, but it does not spell out every borderline case. For example, there may be questions where property steps are taken before or after the formal amalgamation, or where the transfer structure is more complicated than a straightforward vesting of assets.

Another practical difficulty is that the relief depends on legislation outside the LBTT code as well as the LBTT relief provision itself. You may need to confirm exactly what type of society is involved, whether it is “registered” for the relevant purpose, and whether the transfer is truly one of “engagements” under the Friendly Societies legislation.

So the analysis is often document-heavy. The constitution of the society, the statutory approvals, the amalgamation or transfer instrument, and the land transfer documentation may all matter.

Key takeaways

• This is a specific LBTT relief for land transactions connected with certain statutory amalgamations or transfers involving friendly societies.
• The relief is full, but only where the transaction is effected by, or in consequence of, one of the listed procedures under the Friendly Societies Acts.
• It is not enough that a friendly society is involved; the land transaction must be tied to the qualifying statutory reorganisation.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on LBTT Tax Relief for Land Transactions Involving Friendly Societies

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