Stamp Duty Land Tax relief for Freeports
Published 3 March 2021
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This publication is available at https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-freeports/stamp-duty-land-tax-relief-for-freeports
Who is likely to be affected
Purchasers of land and buildings situated inside Freeport tax sites located in England who claim relief from Stamp Duty Land Tax.
General description of the measure
This measure will introduce Stamp Duty Land Tax relief for purchases of land and buildings within a Freeport tax site, subject to a ‘control period’ of up to 3 years and the land being acquired and used in a ‘qualifying manner’.
Relief from Stamp Duty Land Tax will apply to qualifying transactions with an effective date from the date the Freeport tax sites are designated until 30 September 2026.
This measure will also enable HMRC to require information from claimants to ensure that relief continued to be available during the control period.
Policy objective
This Stamp Duty Land Tax relief is designed to incentivise investment in land and buildings in Freeport tax sites.
Background to the measure
On 10 February 2020 the government published a consultation on Freeport policy in respect of its plans to introduce at least ten Freeports in the United Kingdom following departure from the European Union. Freeports are intended to support the policy of levelling up the towns, cities and regions of the United Kingdom.
The government published a consultation response on 7 October 2020, which provided initial confirmation of the tax reliefs it intended to offer to encourage investment in Freeports. This was followed by a Freeport bidding prospectus on 16 November 2020, which included plans for the introduction of the tax reliefs to be offered.
Detailed proposal
Operative date
The Freeport relief given by this measure will have effect as soon as Freeport tax sites have been designated.
The ability for HMRC to ask for information will come into effect from the date of Royal Assent of the Finance Bill 2021.
Proposed revisions
The provisions for this relief will be included within Part 4 of the Finance Act 2003 and cover land and buildings situated in a designated ‘Freeport tax site’ provided the property is acquired for use in a ‘qualifying manner’ and actually used in a ‘qualifying manner’
There will be a provision to clawback the Freeport relief claimed where the purchaser fails to use the property in question in a ‘qualifying manner’.
There will also be an amendment to Schedule 36 of the Finance Act 2008 to enable HMRC to check continued entitlement to reliefs where those reliefs are dependent upon the future actions of the claimant.
Summary of impacts
Exchequer impact (£m)
| 2020 to 2021 | 2021 to 2022 | 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility, and will be set out at the next fiscal event.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is expected to have no impact on individuals as it only affects businesses. This measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts for those groups sharing protected characteristics. The measure applies only to England, so there will be no Northern Ireland impacts.
Impact on business including civil society organisations
This measure is expected to have a negligible administrative impact on businesses and civil society organisations purchasing land and buildings for commercial purposes. One-off costs will include familiarisation with guidance on eligibility to claim relief, understanding when relief may be subject to clawback at the end of the control period and what to do in that event.
Further one-off costs could include intermediaries such as conveyancers updating or purchasing new software to enable them to calculate a purchaser’s tax where relief is claimed. A one-off cost in training and upskilling staff may also apply.
There are not expected to be any continuing costs. Customer experience is expected to be the same as the processes and requirements for existing Stamp Duty Land Tax reliefs.
Operational impact (£m) (HMRC or other)
HMRC will have to make changes to IT systems to introduce this change at an estimated cost of £1.8 million. HMRC will also require some extra staff to administer this change at an estimated cost of £140,000 up to and including the 2025 to 2026 year.
There are no other financial consequences for HMRC.
Other impacts
Other impacts have been considered and none has been identified.
Monitoring and evaluation
The measure will be monitored through information collected from tax returns and through communications with the affected taxpayer population. Freeports governance bodies will also need to monitor and evaluate business activity in each Freeport.
Further advice
If you have any questions about this change, please contact stamptaxes.budgetfinancebill@hmrc.gov.uk.