The 75% group test for stamp duty land tax relief
The key point
For SDLT group relief, a 75% shareholding alone is not enough. The same company must usually have at least 75% rights to shares, distributable profits and winding-up assets.
- Check the group position on the SDLT effective date.
- Read the rights attached to every share class.
- Look for formal or informal plans involving an outside party.
Scroll down for the full analysis.
Read the original guidance here:
The 75% group test for stamp duty land tax relief
Company groups can sometimes get stamp duty land tax relief when property moves within the group. The first question is whether, on the day of the transfer, the companies are in the same 75% group, because unless they are, relief may not even be possible. Timing can decide whether relief is possible.
What this rule is about
This HMRC manual page explains key words used in the rules for group, reconstruction and business-purchase reliefs. It does not itself say that a company qualifies for any relief.
People often look only at who owns most shares. That is not enough. The law tests profit and winding-up rights.
Those extra tests matter where there are different share classes, investor rights, or unusual company articles.
What the official source says
HMRC says a company is a body corporate. For group relief, two companies are in the same group if one is a 75% subsidiary of the other, or both are 75% subsidiaries of the same parent company.
A company is a 75% subsidiary only if the parent meets all three parts of the test.
- The parent must beneficially own at least 75% of the ordinary share capital.
- The parent must be entitled to at least 75% of profits available for distribution.
- The parent must be entitled to at least 75% of assets available for distribution on a winding-up.
- Share ownership may be direct or held through other companies.
- Ordinary share capital generally includes issued shares, apart from shares limited to a fixed dividend with no further profit rights.
- A group company is one in the same group as the buyer or seller on the effective date of the transfer.
The effective date is the date used for SDLT purposes. It matters because the group link must exist then, rather than merely before or after it.
HMRC also says that “arrangements” has a wide meaning. It includes a scheme, agreement or understanding, even if nobody could enforce it in court.
For these rules, control means the power to make sure a company acts as someone wishes. HMRC says that power may come from shares, voting rights, the articles of association, or another document that governs the company.
What this means in practice
If your solicitor has said group relief may apply, do not stop at a simple ownership chart. Check what each share class actually gives its holder.
A parent with 80% of the ordinary shares may still fail the group test if it does not have the required rights to profits or winding-up assets. The 75% figure has three separate parts.
- Check the legal owner and beneficial owner of the shares.
- Check whether another company sits between the parent and subsidiary.
- Read the rights attached to preference, growth, voting and ordinary shares.
- Check who receives profits when they are distributed.
- Check who would receive assets if the company closed down.
- Record the group position on the SDLT effective date.
There is another point people miss: a planned sale or change in control can matter. A plan can count as an arrangement without a signed contract.
How to analyse it
Start with the company relationship, then test the rights behind it. “Parent”, “subsidiary” and “group company” are useful labels, but they do not settle the SDLT result.
- Identify the company buying the property and the company transferring it.
- Fix the effective date of the property transfer.
- Draw the ownership chain on that date.
- Work out each company’s ordinary share capital.
- Test the 75% share ownership requirement.
- Test the separate 75% rights to profits requirement.
- Test the separate 75% rights to winding-up assets requirement.
- Look for agreements, understandings or plans involving outside companies.
- Then check the separate conditions for the relief being considered.
Why separate the last step? Because being in the same group is only one part of the wider group relief rules. Reconstruction and business-purchase reliefs have their own conditions too.
Example
Imagine Oak Holdings Ltd owns 80 of the 100 ordinary shares in River Ltd. Oak is also entitled to 80% of River’s distributable profits and 80% of its assets on a winding-up. On those figures, River is Oak’s 75% subsidiary.
Now change one fact. Suppose another share class means Oak can receive only 60% of the assets on a winding-up. Despite owning 80% of the ordinary shares, Oak would not meet all three parts of this 75% test.
This example only explains the group definition. It does not show that relief is available for a property transfer.
Why this can be difficult in practice
Most problems arise because the ownership chart hides the real rights. An ownership chart can show percentages while leaving unexplained the voting rights, profit rights, special investor protections, and winding-up rights that may determine the position. Percentages alone do not answer it.
You might think an unsigned plan cannot matter. It can. HMRC’s manual says an arrangement may be an informal understanding.
- Different share classes can produce different answers for each 75% test.
- Indirect ownership needs careful tracing through every company in the chain.
- Beneficial ownership may differ from the name shown on a register.
- Rights in articles or shareholder agreements may affect control.
- A future sale or outside funding plan may be relevant even without a formal contract.
- Passing the group test does not remove the need to meet the relief’s other conditions.
HMRC’s manual is useful for showing its approach. Still, the legislation is the law, and the detailed company documents often decide the answer.
Key takeaways
- A 75% group test has three separate parts, not one.
- Check profits and winding-up rights as well as share ownership.
- Being in the same group does not, by itself, prove SDLT relief.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 7 para 1 — group relief and the 75% group test
- FA 2003 Schedule 7 para 2 — arrangements and restrictions on group relief
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The detailed effect of indirect holdings, share rights and rights to profits or winding-up assets can depend on the company documents and group structure.
- Whether an informal plan is an arrangement depends on the facts.
- The source page does not provide enough information to decide whether a particular reconstruction or business purchase qualifies for relief.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- A current group structure chart
- Share registers and details of each share class
- Articles of association and shareholder agreements
- Evidence of rights to profits and winding-up assets
- Documents showing any planned sale, funding or change of control
- The effective date of the property transfer
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION The 75% group test for stamp duty land tax relief [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 7 para 1 - group relief and the 75% group test https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - arrangements and restrictions on group relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm23020 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The detailed effect of indirect holdings, share rights and rights to profits or winding-up assets can depend on the company documents and group structure. - Whether an informal plan is an arrangement depends on the facts. - The source page does not provide enough information to decide whether a particular reconstruction or business purchase qualifies for relief. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: The 75% group test for stamp duty land tax relief
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