Landowners often sit on plots with strong development potential but face barriers such as planning uncertainty, complex tax implications, fragmented ownership and lack of inhouse expertise. These obstacles can delay progress or reduce land value if handled incorrectly.
In order to be successful, many developments require several landowners to come together to create a more attractive site to sell to a developer. This type of arrangement needs careful consideration to ensure that all landowners benefit appropriately and no last minute issues arise from a lack of clear strategy and agreement.
The two main options for landowners working together are land pooling and contractual collaboration.
Land pooling
This route requires all of the landowners to transfer an interest in their land to the other landowners so they can all share in the disposal proceeds arising from the sale of each parcel of land. However, this structure is not without tax and legal issues. There is a potential for a “dry tax charge” (a tax charge where there are no “proceeds” of sale to meet the liability) as capital gains tax (CGT) maybe due when the pooling takes place. In addition, HMRC are still considering the stamp duty land tax (SDLT) position, so although they currently accept that SDLT is not due on pooling this position may change. Finally, if planning permission is never granted then it can be messy to extract the land from the pool.
Contractual collaboration
Under this type of arrangement there are no transfers of land at the outset and so no CGT or SDLT charges. Instead, the landowners enter into an agreement which documents how the eventual sale proceeds will be shared as well as binding them to act together for the benefit of the site as a whole. Without careful tax planning a double tax charge can arise on the equalisation payments between landowners. In addition, VAT advice should be sought to confirm whether a “consortium” registration would be of benefit, to allow the recovery of any costs associated promoting the land.
What happens next?
Once the landowners are bound together then they will enter into further agreements with other parties with the aim of obtaining planning permission and realising a sale of the land. In some cases, landowners may wish to be involved in building out the site.
Several approaches allow landowners to benefit from the expertise of others while retaining control of the land:
Promotion Agreements
A promoter funds and manages the planning process
Benefits:
- No upfront cost for the landowner
- Expert driven planning strategy
- A shared goal of maximising sale value
Option Agreements
A developer secures the right (but not the obligation) to purchase the land.
Benefits:
- Greater certainty of a future buyer
- Reduced risk for the landowner
- Developer funded due diligence
Joint Ventures
A shared ownership structure where both parties contribute to development and share returns.
Benefits:
- Potential for significantly higher returns
- Joint decision-making
- Flexible structure tailored to the site
Conditional Contracts
A developer commits to purchase the land once specific conditions (e.g., planning consent) are met.
How can professional advisers support landowners in collaborating and choosing the right route for realising their land value?
Because each site is unique, advisers help by providing:
- Clear financial modelling
- Tax advice to avoid unnecessary liabilities
- Optimal structure selection
How does tax impact land disposals?
Tax plays a major role in determining net proceeds. Key considerations include:
- Capital Gains Tax
- Corporation Tax
- Stamp Duty Land Tax
- Inheritance Tax
- Income vs. capital treatment
- VAT
- Business structure impacts (personal vs. corporate ownership)
Early tax planning helps avoid costly mistakes and ensures any collaboration and disposal model supports your long-term goals.
What steps should landowners take before entering into agreements?
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Understand your objectives
Are you seeking to maximise value, speed, long-term security, or reduced personal involvement?
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Get an initial planning view
A basic appraisal helps determine development feasibility.
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Assemble the right professional team
This typically includes a tax adviser, solicitor, planning consultant, and surveyor.
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Assess collaboration structures
Match the structure to risk appetite, timeline, and financial objectives.
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Protect your position legally
All agreements must clearly outline responsibilities, timelines, and financial returns.
How PEM can help
PEM supports landowners throughout the development journey with:
- Tax structuring and planning
- Collaboration model evaluation
- Financial modelling
- Ongoing support through development and sale
Our aim is to help you secure the best outcome while managing risk and ensuring tax efficiency.
Want tailored advice for your land?
Whether you’re considering a collaboration, promotion agreement, joint venture, or simply need clarity on tax implications, our specialists can guide you through your options.
On 6 May 2026 our Property Tax experts will be presenting at a Commercial Real Estate & Landowner Seminar at The Moller Institute, to register please click here.
