Land and Buildings Transaction Tax - property investment funds: consultation

Part 2 - Reserved Investor Funds – A Call for Evidence and Views

1. The consultation also seeks views on the Reserved Investor Fund framework, associated Stamp Duty Land Tax (SDLT) regime and the case for introducing a similar regime under LBTT.

2. A Reserved Investor Fund (RIF) is a new type of investment fund in the UK designed to provide a flexible and cost-effective way for institutional and professional investors to invest in assets such as property. The fund is governed by a contract between investors, the manager (which must be a regulated alternative investment fund manager), and the depositary.

3. Following a consultation in 2023, the UK government introduced the RIF framework in March 2025 with a view to enhancing the country's attractiveness as an investment hub, offering a quicker route to market compared to authorised UK vehicles.

4. While sharing similarities with CoACS, they are structured as an unauthorised co-ownership alternative investment fund (AIF), meaning they are not subject to the same regulatory requirements as authorised funds but still offer tax advantages and operational efficiencies. RIFs must also adhere to a number of qualifying conditions, such as a genuine diversity of ownership and restrictions on the type or location of property held.

5. The SDLT treatment of RIFs is set out in The Co-ownership Contractual Schemes (Tax) Regulations 2025. These regulations amend s102A of the Finance Act 2003 (FA03) so that it applies to both CoACS and RIFs in the same way, broadly that the fund is treated as a company and the units within the fund are treated as shares. The intended effect is that transfers of units do not give rise to an SDLT liability on the underlying assets held by the fund. S65A of FA03 is similarly amended to allow for seeding relief (See Part 3).

6. Stakeholders have raised concerns with the Scottish Government around the potential detrimental impacts on inward investment to Scotland if equivalent arrangements are not introduced under LBTT.

7. If the Scottish Government were to introduce relief(s) in respect of RIFs, recognising that properties are being held on a UK-wide basis, we would expect these to mirror the UK reliefs in the first instance.

Q6 Should the transfer of units within RIFs be exempt from LBTT? Please set out further commentary on the basis of your views.

Q7 If yes, should the LBTT treatment replicate the SDLT treatment of treating the RIF a company and units as shares? Please set out further commentary on the basis of your views.

Q8 Are there any aspects of the existing SDLT framework which would need to be amended if equivalent LBTT arrangements were introduced?

Q9 Are there any alternative approaches that the Scottish Government should consider?

Q10 What would the impact be on investment in Scottish property if equivalent LBTT arrangements were not introduced?