SDLT Relief in Freeports and Investment Zones

If you're buying commercial property or land in a designated Freeport or Investment Zone in England, you may be able to claim full relief from Stamp Duty Land Tax (SDLT). This relief can save you thousands of pounds on qualifying purchases made before the scheme closes in 2031 or 2034, depending on...

What are Freeport and Investment Zone special tax sites?

A special tax site is a specific area of land where the government has created tax incentives to encourage business investment and economic growth. These sites are designated as either Freeport tax sites or Investment Zone tax sites.

These special tax sites exist only in England (separate schemes operate in Scotland and Wales). You can check the exact boundaries of designated sites using official government maps before making your purchase.

When you can claim relief

You can claim SDLT relief when buying:

Land or buildings in a special tax site
A lease for land or buildings, including long lease renewals and rental payments

The relief is available for purchases made from the date a special tax site is officially designated until:

30 September 2031 for English Freeport special tax sites
30 September 2034 for Investment Zone special tax sites

You can claim relief even if previous owners have already claimed it on the same property, provided your purchase happens before the relevant end date.

When you cannot claim relief

Relief is not available for:

Purchases made before a site is officially designated as a special tax site
Purchases made after 30 September 2031 (Freeports) or 30 September 2034 (Investment Zones)
Residential property
Land or buildings you intend to develop into residential property
Property you plan to hold as stock and resell without development or redevelopment

Who can claim relief

You can claim relief if you intend to use the property in one of these qualifying ways:

Running a commercial trade or profession
Development or redevelopment for resale
Letting the property to tenants (as long as it won't be used as residential property)

The key requirement is that the property must be used for commercial purposes, not residential.

How much relief you can claim

The amount of relief depends on what proportion of your purchase qualifies:

Full relief: If at least 90% of the purchase price is for qualifying land or buildings within a special tax site, you can claim full relief on the entire SDLT bill.

Partial relief: If between 10% and 89% of the purchase price is for qualifying land or buildings, you can claim relief on the proportion that qualifies.

No relief: If less than 10% of the total purchase price is for qualifying land or buildings, you cannot claim any relief.

This proportional approach applies whether you're buying land partly inside and partly outside a special tax site, or if only some of your purchase will be used in a qualifying way.

Example 1: Partial use

You pay £800,000 for land wholly within a special tax site. However, £200,000 (25%) will not be used in a qualifying way. The remaining £600,000 (75%) will be used commercially. You can reduce your SDLT bill by 75% of the total tax due.

Example 2: Land straddling boundaries

You pay £2 million for land. Of this, £400,000 (20%) is for land outside the special tax site, and £1.6 million (80%) is for land inside the site that will be used in a qualifying way. Your SDLT bill is reduced by 80%.

Example 3: Below the threshold

You pay £5 million for land. Only £400,000 of this is for land inside the special tax site intended for qualifying use. Since £400,000 is less than 10% of the £5 million total, you cannot claim any relief.

How to claim relief

You must complete and submit a land transaction return within 14 days of the transaction. All claims must be submitted on or before:

30 September 2031 for Freeport special tax sites
30 September 2034 for Investment Zone special tax sites

The claim is made through the standard SDLT return process, where you'll need to specify that you're claiming this relief.

The three-year control period

After claiming relief, there's a three-year control period during which you must use the property in a qualifying way. If at any time during these three years the property is not being used in a qualifying way, you must be taking reasonable steps to either:

Start using it in a qualifying way, or
Sell the property

If you're not taking either of these steps, the relief will be withdrawn. You'll then need to:

Submit a further SDLT return
Pay the tax you originally claimed relief on within 30 days

This control period ensures the relief is only kept by those genuinely using the property for the intended commercial purposes.

Planning your purchase

Before buying property in or near a Freeport or Investment Zone, check:

Whether your intended property falls within the designated boundaries
That your planned use qualifies for relief
The designation date and end date for claims
What proportion of your purchase qualifies if you're buying mixed-use land or property straddling boundaries

If you're buying property that will require development before commercial use begins, make sure you understand your obligations during the three-year control period.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.