Stamp duty when a shareholder takes company property on winding up
In brief
HMRC says it would not seek stamp duty in its example where a shareholder lender receives a company’s equity in property on winding up, while the loan remains unpaid.
- This is HMRC guidance, not a special statutory winding-up exemption.
- Debt taken over, settled or released can change the answer.
- The loan, security and winding-up papers matter.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a shareholder takes company property on winding up
Stamp duty when a shareholder takes company property on winding up
If you lent money to your company and receive its property when it closes, stamp duty may not arise merely because a mortgage ends over the property.
HMRC gives a narrow example in which the shareholder gives nothing for the transfer.
What this rule is about
A company can own land that it bought with a loan from its shareholder. It may secure that loan with a mortgage over the property.
When the company is wound up, the shareholder may receive the property instead of cash. What, if anything, did they give for it?
What the official source says
HMRC’s manual describes a case in which A owns all the shares in B Ltd and has lent it money to buy property. That property provides security for the loan.
On winding up, B Ltd transfers the equity in the property to A. Even so, the loan remains in place. HMRC says it would not argue that A has taken over a debt or given another form of payment.
- A owns the company’s shares.
- A had lent money to the company.
- Using that loan, the company bought property.
- As mortgage security for the loan, the property served that role.
- On winding up, the company transfers the equity in the property to A.
- No release or other settlement affects the loan.
- The mortgage comes off because A is both lender and owner.
What this means in practice
This is not a general tax break for all company wind-ups. Rather, it sets out HMRC’s view of one set of facts.
Stamp duty can apply where someone gives money, assets, services or debt relief for land. Taking over an existing debt can also count as payment.
In HMRC’s example, A does neither.
- Do not assume the property’s value sets the stamp duty bill.
- Check whether anyone releases, settles or takes over the loan.
- Check whether the transfer gives the shareholder more than the equity.
- Keep the loan and mortgage papers with the winding-up records.
How to analyse it
Begin with the real legal and financial steps, rather than the label on the transfer. A winding-up dividend alone does not answer the stamp duty question.
- Identify which land interest the transfer conveys.
- Read the loan agreement and the security documents.
- Work out who owed the debt before the transfer.
- Check whether the debt continues after the transfer.
- Check whether the shareholder takes on any debt.
- Check whether the shareholder releases debt as part of the deal.
- Identify any other money or value given for the property.
Example
A owns B Ltd and lent it £300,000 to buy a warehouse. B Ltd grants A security over the warehouse.
Later, B Ltd is wound up and transfers the equity in the warehouse to A. That £300,000 loan is not released.
As a result, the mortgage ends because A now owns the warehouse and remains the lender. HMRC says it would not treat A as having taken over debt or given payment in this example.
Why this can be difficult in practice
Although the paperwork may record that the mortgage is discharged, the reason for the discharge matters. A discharge linked to settling or releasing the company debt is not the same as the facts in HMRC’s example.
Here is the part people get wrong: a shareholder can be both lender and recipient, but the documents may still create a separate payment for the land.
- A loan release may count as payment for the property.
- A shareholder may receive property subject to different debt terms.
- Several shareholders may have different rights to the loan and property.
- The transfer documents may not match the loan records.
Key takeaways
- HMRC’s example is narrow and fact-specific.
- The end of a mortgage does not automatically show that anyone took over debt.
- Whether the loan continues, is settled or is released is the key question.
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 section 43 — what counts as a land transaction
- FA 2003 section 50 — how the amount paid is identified
- FA 2003 Schedule 4 para 1 — the general meaning of the amount paid
- FA 2003 Schedule 4 para 8 — when taking over debt counts as payment
- FA 2003 Schedule 3 para 1 — exemption where nothing is given for land
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 manual does not explain how HMRC would treat every form of mortgage discharge during a winding-up.
- It does not settle cases where the shareholder takes responsibility for debt, releases debt, or receives property beyond the equity.
- The supplied HMRC view is an extract from August 2007 and may not show HMRC’s current approach.
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.
- The loan agreement and any later changes to it
- The mortgage or security documents
- The liquidator’s papers and transfer documents
- Evidence showing whether the loan remains unpaid, released or settled
- A record of what property interest the shareholder receives
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 Stamp duty when a shareholder takes company property on winding up [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 section 43 - what counts as a land transaction https://www.legislation.gov.uk/ukpga/2003/14/section/43/2025-11-17 - FA 2003 section 50 - how the amount paid is identified https://www.legislation.gov.uk/ukpga/2003/14/section/50/2025-11-17 - FA 2003 Schedule 4 para 1 - the general meaning of the amount paid https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 4 para 8 - when taking over debt counts as payment https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/8/2025-11-17 - FA 2003 Schedule 3 para 1 - exemption where nothing is given for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/1/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm04043 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its 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 manual does not explain how HMRC would treat every form of mortgage discharge during a winding-up. - It does not settle cases where the shareholder takes responsibility for debt, releases debt, or receives property beyond the equity. - The supplied HMRC view is an extract from August 2007 and may not show HMRC's current approach. 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: Stamp duty when a shareholder takes company property on winding up
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