Group Relief Withdrawn After Purchaser Leaves Group Within Three Years

SDLT group relief clawback after a company leaves the group

If a company claims SDLT group relief on a land transfer and then leaves the seller’s group within three years, that relief on the original transfer can be withdrawn even if the property has already been transferred to another group company. The SDLT clawback is calculated by looking at the original relieved transaction and using the market value at that time, while any later intra-group transfer must be considered separately.

• Group relief may be withdrawn if the purchaser in the original intra-group transfer stops being in the same group as the seller within three years.
• The fact that the land was later moved to another group company does not stop a clawback on the original transfer.
• If relief is withdrawn, SDLT is worked out as if no relief had been claimed on the original transaction.
• The relevant value for the clawback is the market value at the effective date of the original transfer, not any later increase in value.
• A later transfer between other group companies is not automatically affected and may keep its own group relief if the conditions were met at that time.
• Each transfer in a restructuring should be tested separately, and any statutory exceptions should be checked on the facts.

Scroll down for the full analysis.

When group relief is withdrawn after a company leaves the group: property already moved to another group company

This page explains a specific SDLT group relief problem. A company buys land from another group company and claims group relief. The land is then moved again within the group. Later, the original purchaser leaves the seller’s group within three years. The question is what SDLT charge arises, on what value, and whether the later intra-group transfer is also affected.

What this rule is about

SDLT group relief can remove the SDLT charge on certain transfers of land between companies in the same group. But that relief is not always final. If the purchasing company stops being in the same group as the selling company within three years of the original transfer, the relief may be withdrawn.

The source material deals with a common restructuring pattern:

• Company A transfers land to Company B and B claims group relief.
• B later transfers the same land to Company C, also within the group, and C claims group relief on that second transfer.
• B is then sold out of the group within three years of the original transfer from A to B.

The key point is that the withdrawal of relief is tested by looking back at the original relieved transaction. The later movement of the property within the group does not prevent a clawback if the statutory conditions for withdrawal are met.

What the official source says

The official example starts with A Ltd, B Ltd and C Ltd all in the same SDLT group. A transfers a freehold to B. B claims group relief. Four months later, B transfers the same freehold to C, and C also claims group relief.

A then sells the shares in B to an unconnected third party within three years of the original transfer from A to B. Because B, the purchaser in that original transaction, has ceased to be in the same group as A, the vendor in that transaction, group relief on the original transfer is withdrawn. The source states that no exception applies.

The SDLT then payable is the SDLT that would have been due on the original transaction if relief had not been claimed. In the example, that means SDLT is charged by reference to the market value of the property at the effective date of the original transfer from A to B.

The later increase in the property’s value is ignored. The source is explicit that the withdrawal concerns the relief claimed on the original transaction, so the charge is based on the original transaction, not on later values.

The source also says that relief on the later transfer from B to C is not withdrawn merely because B and C later leave the wider group. That is because, at the time B transferred the property to C, B and C were in the same group as each other.

What this means in practice

The practical effect is that a later sale of the original purchaser can trigger an SDLT clawback even if the land has already been moved elsewhere within that purchaser’s sub-group.

In the example, B was the purchaser in the original relieved transfer from A to B. When A sells B to an outside buyer within three years, B leaves A’s group. That is enough to withdraw the relief on the A-to-B transfer.

It does not matter that:

• the land was later transferred from B to C,
• C also claimed group relief on that later transfer, or
• the property had increased in value by the time B was sold.

For the clawback on the original transaction, the charge is recalculated by reference to the original transaction itself. The relevant value is the market value at the effective date of that original transfer, because that is the transaction for which relief is being withdrawn.

The source also makes an important separate point about the second transfer. The transfer from B to C is not automatically tainted just because B later leaves A’s group and C goes with it. On the facts given, relief on the B-to-C transfer is not withdrawn, because B and C were still in the same group when that transfer took place.

How to analyse it

When looking at a chain of intra-group transfers followed by a degrouping, it helps to separate each transaction and test it on its own facts.

1. Identify the original relieved transaction.

   Who was the vendor? Who was the purchaser? What land interest was transferred? When was the effective date?

2. Ask whether the purchaser in that transaction ceased to be in the same group as the vendor within three years.

   That is the trigger considered in the source material.

3. Check whether any statutory exception applies.

   The source says none applied on its facts. It does not set out the exceptions, so this point should not be assumed away in other cases.

4. If relief is withdrawn, calculate SDLT by reference to the original relieved transaction.

   Use the value relevant at the effective date of that original transaction. Do not substitute a later market value just because the property has gone up in price.

5. Then analyse any later intra-group transfer separately.

   Was group relief available on that later transfer at the time it happened? If so, does anything in the legislation withdraw relief on that later transfer? The source’s answer on its own facts is no.

6. Check who still holds the original property.

   The source notes that B and its relevant associated company C still held the freehold that had been transferred in the original transaction. That fact forms part of the example’s analysis.

Example

Illustration based on the official example:

A Ltd transfers freehold land to B Ltd. The consideration is £1.25 million, but the market value at that time is £1 million. B claims group relief, so no SDLT is paid at that stage.

Four months later, B transfers the same land to its subsidiary C Ltd for £250,000. The market value is now £1.1 million. C also claims group relief.

Later, but still within three years of the original transfer from A to B, A sells all the shares in B to an outside buyer. B leaves A’s group, and C leaves with B because C is B’s subsidiary.

On these facts, relief on the original transfer from A to B is withdrawn. The SDLT charge is worked out as if relief had never applied to that original transfer. The relevant value is the market value at the time of the original A-to-B transfer, namely £1 million. The later increase to £1.1 million or £1.75 million does not change that calculation.

By contrast, the source says relief on the later B-to-C transfer is not withdrawn on these facts.

Why this can be difficult in practice

The difficulty is that a group may think the risk has gone once the property has been moved again within the group. The source shows that this is not necessarily right. The original relieved transaction can still be revisited if the original purchaser leaves the vendor’s group within the relevant period.

Another practical difficulty is that there may be several different transactions, each with its own relief claim and its own possible withdrawal rules. It is easy to blur them together. The correct approach is to test each transfer separately.

The source also mentions that no exception applied, but does not explain those exceptions. That means readers should be careful not to assume every degrouping within three years produces the same result. The answer can be fact-sensitive.

Finally, valuation can be misunderstood. The source makes clear that, for the withdrawal of relief on the original transaction, the relevant figure is the market value at the effective date of that original transaction. Later changes in value are not brought into account simply because the clawback happens later.

Key takeaways

• If the purchaser in an original intra-group land transfer leaves the vendor’s group within three years, group relief on that original transfer may be withdrawn.
• The SDLT clawback is based on the original relieved transaction, using the value at that time, not a later increase in market value.
• A later transfer of the same property to another group company must be analysed separately and is not automatically stripped of relief just because the original purchaser later leaves the group.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Group Relief Withdrawn After Purchaser Leaves Group Within Three Years

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