Stamp duty when connected companies transfer land
Connected company land deals
A company buying land from a connected person may face SDLT based on market value rather than the contract price.
- Share-based deals can also trigger the rule.
- Market-value evidence matters.
- Exceptions and reliefs need separate checks.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when connected companies transfer land
HMRC may work out stamp duty by using the land’s market value, rather than the contract price, if a company buys land from someone connected with it. Deals that include shares can produce the same result. That difference can be costly.
What this rule is about
Finance Act 2003 section 53 prevents connected parties from reducing SDLT by agreeing a low price when a company acquires land and the statutory conditions apply. It sets a minimum amount for the SDLT calculation. That amount is the market value of the land at the relevant tax date.
HMRC’s manual points to this rule. As HMRC guidance, the manual is not the law itself.
What the official source says
Where the buyer is a company, the rule applies if the seller is connected with it or if the deal includes shares in a company connected with the seller. A low written price does not prevent it from applying.
- A company must be the buyer.
- A seller may have a connection with that company.
- Or the deal may include shares in a company connected with the seller.
- Parties can issue or transfer the shares as part of the deal.
- For SDLT, the amount used cannot be below the land’s market value.
- Where a company receives a lease and must pay rent under that lease, include the rent in the SDLT calculation, as the statute requires. Rent counts too.
What this means in practice
A low price does not settle the stamp duty position where the buyer is a company, a statutory connection exists, and the transaction contains other consideration. It may conceal the real issue. A share swap does not automatically avoid the rule either. The key question is whether the statutory connection test is met.
- Keep a clear record of who owns and controls each company.
- Obtain evidence of the land’s market value.
- Check every part of the deal, not only the cash price.
How to analyse it
Work through the deal in order. Do not start with the figure in the transfer document.
- Identify the land or lease the company is receiving.
- Confirm whether the buyer is a company.
- Determine whether the seller has a connection with the buyer.
- Check whether shares form any part of the payment.
- Value the land at the relevant tax date.
- Check whether a section 54 exception, exemption or relief changes the result.
Example
North Ltd buys a warehouse from a connected individual for £300,000. Evidence shows that the warehouse is worth £500,000 at the relevant tax date. Section 53 means the SDLT calculation uses at least £500,000, rather than £300,000. This example does not decide whether another relief changes the final bill.
Why this can be difficult in practice
Companies can have layered and indirect ownership. In a wider deal, you can easily miss a connection or a share element. You may also need proper valuation evidence for market value.
- “Connected” is a legal test, not simply a business relationship.
- A deal may involve shares issued by a different company.
- Exceptions and reliefs need checking separately.
Key takeaways
- Connected company deals may use market value for SDLT.
- The stated price may not be the SDLT figure.
- Check ownership, shares, valuation and exceptions.
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 53 — market value rule for connected company land transfers
- FA 2003 section 54 — exceptions to the connected company market value rule
- FA 2003 section 118 — how SDLT market value is determined
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 supplied HMRC page does not explain how the connected-person test applies to a particular ownership structure.
- Market value can be disputed and will depend on evidence about the land and the transaction date.
- The supplied materials do not establish whether a particular relief or exemption applies.
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 transfer agreement and any share issue or share transfer documents
- A group chart and records of ownership and control
- A valuation of the land at the relevant tax date
- Lease terms, including any rent
- Details of any SDLT relief or exemption claimed
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 connected companies transfer land [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 53 - market value rule for connected company land transfers https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 section 54 - exceptions to the connected company market value rule https://www.legislation.gov.uk/ukpga/2003/14/section/54/2025-11-17 - FA 2003 section 118 - how SDLT market value is determined https://www.legislation.gov.uk/ukpga/2003/14/section/118/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm06500 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 supplied HMRC page does not explain how the connected-person test applies to a particular ownership structure. - Market value can be disputed and will depend on evidence about the land and the transaction date. - The supplied materials do not establish whether a particular relief or exemption applies. 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 31 August 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when connected companies transfer land
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