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LTT relief for Welsh freeports will be different


Published: 17 Jan 2024 Update History

Welsh government consultation on land transaction tax (LTT) relief for special tax sites in freeports and investment zones highlights six differences compared to the stamp duty land tax (SDLT) relief in England.

In March 2023, the Welsh and UK governments jointly announced the Celtic and Anglesey freeports. Welsh freeports are designed to provide tax and customs duty incentives to new businesses established in the freeport area, or existing businesses expanding their operations. 

Designated Welsh special tax sites in Welsh freeports and any future investment zones in Wales should include a relief from LTT for qualifying land transactions. To be consistent across the UK, the Welsh government intends that the LTT relief offered in Welsh special tax sites will broadly be equivalent to SDLT relief available in special tax sites in England. However, LTT relief is subject to six key differences: 

  • it can only be claimed in relation to land within the designated special tax site;
  • caretaker or security staff accommodation development is to be considered incidental to the use for qualifying purposes and therefore qualifies for relief in all situations;
  • it will use a marginally tighter definition of ‘excluded rents’ compared to SDLT;
  • relief related to alternative finance arrangements will not follow SDLT in making a ‘relevant person’ liable to file the further return and pay LTT in the event that the relief needs to be withdrawn; 
  • it will provide withdrawal rules so they will not apply where the person who has claimed relief has disposed of substantially all their economic interest in the land; and
  • the relief will address situations where an assignment of a lease should, as in other cases, sometimes be treated as the grant of a lease. 

At Autumn Statement 2023, the UK government announced that the SDLT relief period will be extended from five years to 10 years for both freeports and investment zones in England. The Welsh government has previously agreed to propose that LTT relief will be available for a specified period of up to five years. An extension of the relief period is being considered by the Welsh government. 

The consultation on LTT special tax sites relief is open until 18 February. If you have comments on the proposals that could contribute to a response from ICAEW, please contact Lindsey Wicks

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