Jurisdiction(s):
United Kingdom

Land pooling for development: structures, equalisation and tax (CGT, SDLT, VAT, IHT)—partnerships, bare trusts and cross-options; establishment and exit issues

Published on: 20 May 2021

Published by a LexisNexis Tax expert

Legal News

Article summary

What is land pooling and what is this type of structure used for?

Put simply, land pooling is where a number of landowners collaborate to promote their land for development and to divide both the promotion costs and the sale proceeds. The objectives are two-fold:

to encourage co-operation between owners to bring a site forward for development
to secure an equitable split of costs and returns

The principal tax consideration is capital gains. Imagine landowners A and B each own 50 acres and agree to share expenses and sale proceeds on a 50/50 basis. If A sells first, he pays capital gains tax (or corporation tax if a company). A then pays 50% of his net proceeds to B as an ‘equalisation payment’. That payment is not deductible in computing A’s capital gains tax (CGT) position. To prevent equalisation payments being taxed twice, a tax-efficient pooling structure is needed.

How is a land pooling arrangement typically structured?

There are three preferred structures for pooling land:

partnership: Each landowner transfers their land to a partnership, to be held as an asset of

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