Scotland set for land deal tax relief to boost investment zones

The Scottish government has introduced targeted relief from land and buildings transaction tax (LBTT) for qualifying transactions which fall within designated investment zone sites around Glasgow, Aberdeen and Peterhead.

The relief, set out in the Land and Buildings Transaction Tax (Investment Zones Relief) (Scotland) Order 2026, supports the delivery of Holyrood’s investment zone programme, with long‑term private investment in areas identified as underdeveloped being incentivised.

With the relief in force from 26 February, Andrew Crichton, a commercial real estate expert with Pinsent Masons, said it had the potential to improve the viability of developments at a time when they remain under economic pressure.

“In practical terms, it may be the factor that allows marginal schemes to proceed, particularly where land assembly, remediation or infrastructure delivery is required,” he said.

“For investors and developers, LBTT has often been a decisive friction cost when underwriting Scottish projects against competing opportunities elsewhere in the UK.

“Targeted relief within investment zones directly enhances returns, and could support earlier site acquisition while improving Scotland’s competitiveness for institutional and overseas capital, aligning the relief position with similar SDLT investment zone relief schemes in England.”

The LBTT reliefs come after similar reliefs were introduced for stamp duty land tax (SDLT) in investment zones in England, with the Scottish government claiming the move will ensure the country’s offer is able to compete with other parts of the UK.

Under the terms of the relief, only land that is used for qualifying commercial purposes will be covered, with a three-year control period to ensure it is in place only where actual development occurs.

Scottish public finance minister Ivan McKee told Holyrood the annual costs for the relief had been assessed as being below £5 million, and would be met from the UK government’s funding for the two investment zones.

Crichton warned, however, that the relief did not offer a blanket exemption for developers.

“Similar to the recently introduced LBTT relief for green freeports, careful attention will be required around site boundaries, transaction structuring and ongoing compliance to ensure relief is secured and retained,” he explained.

“For those prepared to engage strategically, the new LBTT relief represents a genuine opportunity to unlock development and long‑term value in areas identified as Scotland’s priority growth locations.”