Understanding Group Relief: No Withdrawal When Vendor Leaves the Group

When SDLT Group Relief Is Not Withdrawn After the Vendor Leaves the Group

SDLT group relief on an intra-group land transfer is not automatically withdrawn just because the seller later leaves the group within three years. HMRC’s example shows that if the buyer stays in the group and the only reason the companies are no longer in the same group is that the original seller has left, the earlier relief is not clawed back.

• Group relief can reduce or remove SDLT on land transfers between companies in the same group.
• Relief can sometimes be withdrawn later, so the reason for any change in group membership matters.
• HMRC’s example says there is no clawback where the vendor transfers land to another group company, relief is claimed, and the vendor is later sold out of the group.
• The key test is causation: are the companies no longer in the same group only because the vendor left?
• This point is useful in reorganisations and disposals, but more complex facts may need careful legal analysis.
• HMRC’s manual gives helpful guidance, but the final legal position depends on the legislation and the actual facts.

Scroll down for the full analysis.

When group relief is not withdrawn because the vendor leaves the group

This page explains a narrow but important SDLT point about group relief. It deals with what happens after a land transfer between group companies where relief was claimed, and then one of the companies later leaves the group. The official example shows that group relief is not automatically clawed back just because the vendor is sold out of the group.

What this rule is about

Group relief can apply when land is transferred between companies in the same group. If the relief applies, SDLT that would otherwise arise on the transfer may be reduced or eliminated.

But group relief can sometimes be withdrawn after the event. That matters because a transaction that looked tax-neutral at the time can later give rise to an SDLT charge if the conditions for keeping the relief are not met.

The specific point here is whether relief is withdrawn if, within three years, the vendor company leaves the group.

What the official source says

The official example involves three companies, all wholly owned by A Ltd:

• B Ltd owns land and transfers it to C Ltd.
• The transfer is for no consideration.
• The land has a market value of £1,000,000.
• C Ltd claims group relief on that transfer.
• Within three years, A Ltd sells its shares in B Ltd to an unconnected third party.
• As a result, B Ltd leaves the group.

HMRC’s conclusion is that group relief is not withdrawn.

The reason given is precise: the only reason the purchaser and vendor are no longer members of the same group is that the vendor has left the group.

What this means in practice

This example shows that not every break in group membership triggers a clawback of group relief.

If the purchaser remains in the original group and the vendor is the company that is sold out, that fact alone does not cause withdrawal of the relief, provided the reason they are no longer in the same group is simply that the vendor has left.

In practical terms, this can matter in reorganisations and disposals. A group may transfer property internally and later sell the former owning company. On the facts of HMRC’s example, that later share sale does not undo the earlier group relief claim.

The market value figures in the example help show the point, but they do not change the conclusion. Even though the land was worth £1,750,000 when B Ltd left the group, relief is still not withdrawn on these facts.

How to analyse it

When checking whether group relief may be withdrawn after an intra-group land transfer, ask:

• Who was the vendor in the original land transaction?
• Who was the purchaser that claimed group relief?
• Are they no longer in the same group within the relevant period?
• If so, why has that happened?
• Was it the vendor that left the group, rather than the purchaser?
• Is the only reason they are no longer in the same group that the vendor has left?

On the HMRC example, those questions lead to a clear answer: no withdrawal.

This is a causation point. The analysis is not just that the companies are no longer grouped together. The key question is what caused that result.

Example

Illustration: Parent company P owns two subsidiaries, X and Y. X transfers a property to Y and Y claims group relief. Two years later, P sells all the shares in X to an outside buyer, but Y stays in P’s group. X and Y are now no longer in the same group. On the same reasoning as the official example, the earlier group relief is not withdrawn if the only reason for the change is that X, the vendor, has left the group.

Why this can be difficult in practice

The example is short and fact-specific. Real transactions are often more complicated.

Difficulties can arise if more than one change happens around the same time, or if the purchaser also leaves the group, or if there is a wider series of steps. In those cases, the question whether the vendor’s departure is the only reason the companies are no longer in the same group may need careful analysis.

The example is also from HMRC’s manual. It is useful evidence of HMRC’s view, but the legal effect ultimately depends on the legislation applied to the actual facts.

Key takeaways

• Group relief is not automatically withdrawn just because the vendor later leaves the group.
• The crucial question is why the vendor and purchaser ceased to be in the same group.
• If the only reason is that the vendor left the group, HMRC’s example says the relief is not withdrawn.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Group Relief: No Withdrawal When Vendor Leaves the Group

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