The Finance Act 2021 introduced a number of tax incentives to build new Freeport sites in England, including stamp duty land tax (SDLT) relief on certain land purchases. Below we answer some frequently asked questions concerning this valuable relief.
What land does the SDLT relief apply to?
The relief will be available for transactions involving ‘Qualifying Freeport land’ with an effective date between the date a Freeport site is formally designated and 30 September 2026. Qualifying Freeport land means land that is situated in a designated Freeport tax site and which is purchased with the intention that it will be used in a ‘qualifying manner’.
For these purposes ‘qualifying manner’ means that the land must be used, developed, redeveloped or exploited by the purchaser, or a connected person, in the course of a commercial trade or profession.
What land is excluded from the relief?
- Land used as a dwelling or as the gardens or grounds to a dwelling
- Purchases of land to be developed or re-developed to become residential property
- Any land held as stock of the business for resale without development or redevelopment
- Land that is exploited as a source of rents payable by a person using the land as a dwelling
How much is the relief?
The amount of SDLT relief available depends on the extent to which the land purchased is ‘Qualifying Freeport land’:
- If more than 90 percent of the consideration, on a just and reasonable basis, is attributable to ‘Qualifying Freeport land’, full relief from SDLT is available
- If less than 90 percent but more than 10 percent of the consideration is apportioned to the ‘Qualifying Freeport land’, SDLT relief is available on the qualifying proportion
- If less than 10 percent of the consideration is apportioned to the ‘Qualifying Freeport land’, then no relief is available
The consideration for the purchase must be apportioned on a just and reasonable basis.
How should the relief be claimed?
The relief must be claimed in a land transaction return. Normal time limits apply. The return claiming the relief should be submitted within 14 days from the effective date of the transaction, which is usually completion but in certain circumstances could be earlie). No claim can be made later than 14 October 2027.
Can the relief be clawed back?
Clawback of the relief will apply in cases where land is purchased and not used exclusively in a ‘qualifying manner’ throughout a control period of three years of acquiring the land, or the period of ownership if shorter.
Exceptions to these clawback rules apply where the purchaser takes reasonable steps to use the land in a ‘qualifying manner’ but the reason the land is not being used in a ‘qualifying manner’ is because of unforeseen circumstances beyond the control of the purchaser.
Where use in a qualifying manner has not yet begun, the land is to be treated as being used exclusively in a qualifying manner if reasonable steps are being taken to ensure that it is used in that manner.
There is no clawback on a disposal of wholly qualifying land disposed of in the control period.
For help and advice on all SDLT matters please get in touch with your usual BDO contact or Malcolm Pengelly.
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