LTT sale and leaseback relief: long leases granted back to an owner
In short
In the official example, an owner transfers a freehold to her company and receives two 999-year leases back. Sale and leaseback relief removes LTT from the leaseback, but not automatically from the freehold transfer.
- The freehold transfer uses a market-value calculation because the company and owner are connected.
- The burdened freehold may have negligible value.
- Later lease assignments are separate LTT transactions.
Scroll down for the full analysis.
Read the original guidance here:
LTT sale and leaseback relief: long leases granted back to an owner
LTT sale and leaseback relief: long leases granted back to an owner
If you move a freehold property into your company and take long leases back, Land Transaction Tax (LTT) can apply to more than one step. Land Transaction Tax replaced stamp duty land tax in Wales in 2018. Although this official example shows that the leaseback may get relief when the conditions are met, the freehold transfer still requires its own calculation. The steps remain separate.
What this rule is about
Ms F owns a freehold property and, because she wants to turn it into two commercial units while obtaining finance for the project, creates a company, G Ltd, to which she transfers the freehold. That is the first step.
G Ltd then grants Ms F two 999-year leases. She pays no premium and only a peppercorn rent. Ms F can then sell those leasehold interests to other people to raise money.
What appears to be one plan contains separate property transactions for LTT. Each needs attention.
What the official source says
Welsh Government guidance says that all the conditions for sale and leaseback relief are met in this example. In this case, the relief applies to the leases that G Ltd grants back to Ms F.
- Ms F transfers the freehold to G Ltd.
- G Ltd grants two 999-year leases back to Ms F.
- The transfer and lease grants form an exchange for LTT purposes.
- Ms F later assigns the leases to other people for payments other than rent.
For the freehold transfer, the amount paid in the exchange is not simply used. Because Ms F and G Ltd are connected, the connected-company market-value rule applies.
Under that rule, use the market value of the interest G Ltd receives, or the usual amount paid if higher. In this case, G Ltd receives a freehold already burdened by two very long leases.
According to the guidance, this burdened freehold will probably have negligible market value. On those facts, the freehold transfer gives rise to no LTT charge. Sale and leaseback relief does not produce that result.
What this means in practice
The key point is simple: relief covers the leaseback, rather than every part of the wider arrangement. Even so, the freehold transfer needs a separate LTT calculation.
- Do not assume a transfer to your own company has no value for LTT.
- Work out what the company actually receives after the long leases exist.
- Keep the leaseback documents separate from any later sales of the leases.
- Check the amount paid when Ms F, or someone in her position, assigns a lease.
A later sale of either 999-year lease is a further property transaction. For that assignment, the official example says LTT looks at the payment, excluding rent.
How to analyse it
Begin with the documents and the order of events. Labels such as “finance arrangement” do not determine the LTT result.
- Is there a transfer of a freehold or another major interest in Welsh land?
- Does the recipient grant a lease back to the original owner?
- Did the parties make the transfer wholly or partly in return for that leaseback?
- Is any other payment limited to money or debt, as the relief requires?
- Does a rule about transfer of rights or a pre-completion step prevent relief?
- Where both sides are companies, are they in the same group at the relevant time?
- Are the seller and company connected, so that market value applies?
- What is the value of the freehold once the long leases burden it?
Separate the answers next. First calculate the freehold transfer. Next consider relief for the leaseback. Finally deal with every later assignment on its own facts.
Example
Ms F transfers her freehold property to G Ltd. G Ltd immediately grants her two 999-year leases, with no premium and a peppercorn rent. As a result, G Ltd has a freehold with little practical value.
In the official example, the market value of that burdened freehold will likely be negligible. Accordingly, no LTT charge arises on the freehold transfer in that example. Relief removes LTT from G Ltd’s grants of the two leases to Ms F.
Later, Ms F sells one lease to a third party. That sale does not share the leaseback relief. LTT considers the amount the new buyer gives for the lease, apart from rent.
Why this can be difficult in practice
Although a peppercorn rent may seem to settle the tax result, the freehold’s value depends on the rights remaining after the leases and on the arrangement’s real terms. It does not.
Here is the point people can miss: a low value for the burdened freehold does not make later lease sales disappear for LTT. Those later sales stand alone.
- A long lease may still leave the freehold with some value.
- A premium, debt arrangement or other payment can change the analysis.
- The relief conditions must fit the actual documents, not just the intended outcome.
- The market-value rule can apply even where little or no cash changes hands.
The Welsh Government page is guidance, not the law itself. It explains one set of facts. A different lease length, payment or company relationship may produce a different result.
Key takeaways
- Sale and leaseback relief can cover the leases granted back to the original owner.
- The connected-company rule can require a market-value calculation for the freehold transfer.
- Later sales of the leases need separate LTT consideration.
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
- LTTA 2017 section 3 — what counts as a land transaction
- LTTA 2017 section 6 — when creating a lease counts as a transaction
- LTTA 2017 section 16 — how land exchanges are treated separately
- LTTA 2017 section 17 — when a transaction remains subject to ltt
- LTTA 2017 section 18 — how the amount paid is worked out
- LTTA 2017 section 22 — market value rule for connected companies
- LTTA 2017 section 23 — exceptions to connected-company market-value rule
- LTTA 2017 section 30 — sale and leaseback relief and claiming rules
- LTTA 2017 section 32 — what counts as a lease
- LTTA 2017 section 68 — what counts as a major interest
- LTTA 2017 section 70 — how market value is defined
- LTTA 2017 section 74 — the test for connected persons
- LTTA 2017 Schedule 4 para 5 — market value for property exchanges
- LTTA 2017 Schedule 9 para 1 — relief for the leaseback part
- LTTA 2017 Schedule 9 para 2 — meaning of sale and leaseback arrangement
- LTTA 2017 Schedule 9 para 3 — conditions for sale and leaseback relief
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority 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. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The example says the value of the burdened freehold is likely to be negligible. That is a valuation judgement, not an automatic result of every long lease.
- The facts needed to decide whether people or companies are connected can be detailed.
- The official example gives no values for later lease assignments, so it does not show the LTT due on them.
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 freehold transfer and each lease document
- Evidence that the company and individual are connected
- Details of any premium, rent, debt or other payment
- A valuation of the freehold subject to the leases
- Documents showing why the sale and leaseback conditions are met
- Details of any later assignment of either lease
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 Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION LTT sale and leaseback relief: long leases granted back to an owner [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 - LTTA 2017 section 3 - what counts as a land transaction https://www.legislation.gov.uk/anaw/2017/1/section/3 - LTTA 2017 section 6 - when creating a lease counts as a transaction https://www.legislation.gov.uk/anaw/2017/1/section/6 - LTTA 2017 section 16 - how land exchanges are treated separately https://www.legislation.gov.uk/anaw/2017/1/section/16 - LTTA 2017 section 17 - when a transaction remains subject to ltt https://www.legislation.gov.uk/anaw/2017/1/section/17 - LTTA 2017 section 18 - how the amount paid is worked out https://www.legislation.gov.uk/anaw/2017/1/section/18 - LTTA 2017 section 22 - market value rule for connected companies https://www.legislation.gov.uk/anaw/2017/1/section/22 - LTTA 2017 section 23 - exceptions to connected-company market-value rule https://www.legislation.gov.uk/anaw/2017/1/section/23 - LTTA 2017 section 30 - sale and leaseback relief and claiming rules https://www.legislation.gov.uk/anaw/2017/1/section/30 - LTTA 2017 section 32 - what counts as a lease https://www.legislation.gov.uk/anaw/2017/1/section/32 - LTTA 2017 section 68 - what counts as a major interest https://www.legislation.gov.uk/anaw/2017/1/section/68 - LTTA 2017 section 70 - how market value is defined https://www.legislation.gov.uk/anaw/2017/1/section/70 - LTTA 2017 section 74 - the test for connected persons https://www.legislation.gov.uk/anaw/2017/1/section/74 - LTTA 2017 Schedule 4 para 5 - market value for property exchanges https://www.legislation.gov.uk/anaw/2017/1/schedule/4/paragraph/5 - LTTA 2017 Schedule 9 para 1 - relief for the leaseback part https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/1 - LTTA 2017 Schedule 9 para 2 - meaning of sale and leaseback arrangement https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/2 - LTTA 2017 Schedule 9 para 3 - conditions for sale and leaseback relief https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/3 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/land-transaction-sale-and-leaseback-relief-technical-guidance HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority is its 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 example says the value of the burdened freehold is likely to be negligible. That is a valuation judgement, not an automatic result of every long lease. - The facts needed to decide whether people or companies are connected can be detailed. - The official example gives no values for later lease assignments, so it does not show the LTT due on them. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 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 4 September 2026
Useful article? You may find it helpful to read the original guidance here: LTT sale and leaseback relief: long leases granted back to an owner
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