Stamp duty anti-avoidance: connected companies and market value
Connected company and market value rule
Where section 75A applies, a company connected with the original seller may face stamp duty based on market value rather than a lower figure used in the arrangement.
- Section 75A must apply first
- Market value is a minimum, not a maximum
- Section 54 exceptions must still be checked
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty anti-avoidance: connected companies and market value
Stamp duty anti-avoidance: connected companies and market value
When section 75A catches an arrangement under which a company acquires land, the company may need to calculate tax by reference to market value. The statutory connection test can link that company to the original seller. The price stated in the steps may not determine the result.
What this rule is about
Section 75A is an anti-avoidance rule. It can apply where a series of steps moves land from an original seller, called V, to a final buyer, called P, for less stamp duty than a direct sale would produce.
When section 75A applies, it treats the land steps as an assumed direct purchase from V to P, even though the arrangement used several steps. Lawyers call this a notional transaction. It is a tax calculation device, not a new property transfer.
Section 75C(6) extends the connected-company market value rule in section 53 to that assumed purchase.
That rule can raise the amount used for stamp duty.
What the official source says
HMRC’s manual says that, if section 75A applies, P is a company, and P is connected with V, section 53 sets the land’s market value on its effective date as the minimum amount for the assumed purchase. Market value sets the floor.
- First, section 75A must apply to the arrangement.
- The final buyer, P, must be a company.
- V must be connected with that company.
- The amount used must be at least the land’s market value on the effective date.
Section 75A normally identifies an amount by looking at the largest amount paid by one person, or received by V or someone connected with V, across the arrangement. If that amount exceeds market value, HMRC says it uses the higher amount.
- A market value of £900,000 sets a minimum if the section applies.
- An amount of £1 million found from the arrangement stays at £1 million.
- Section 53 raises a lower amount of £700,000 to £900,000.
- The special section 75A rule for the assumed purchase sets the relevant date.
Section 54 exceptions expressly limit section 53. Those include limited trustee cases and certain distributions of a company’s assets.
What this means in practice
You cannot assume that a low payment between related companies will set the stamp duty figure. Where section 75A and the connected-company rules apply, an independent valuation may matter as much as the cash that changed hands.
Nor is a label enough. Calling a step a distribution, reorganisation or internal transfer does not settle the issue. The legal steps, ownership and timing all matter.
- Map each company, person and transfer in the arrangement.
- Apply the statutory test to determine whether P and V are connected.
- Find the effective date for the assumed purchase.
- Obtain support for the land’s market value at that date.
- Check the section 54 exceptions before treating market value as final.
When considering section 54, HMRC’s manual says that the assumed purchase may retain the character of the real transfer. The facts decide that.
How to analyse it
Start with the arrangement, rather than one transfer deed. The first question is whether section 75A applies at all. Only then do the connected-company rules become relevant.
- Identify the original seller, V, and the final buyer, P.
- List every step linked with the move of the land.
- Work out whether the section 75A conditions are met.
- Find the largest relevant amount paid or received across those steps.
- Check whether P is a company connected with V.
- Compare that amount with market value on the effective date.
- Test the facts against each section 54 exception.
What establishes connection? Similar business names or directors do not establish it by themselves. Corporation Tax Act 2010 section 1122 supplies the connection test, so you may need ownership and control records.
Example
Assume section 75A catches a set of linked steps. Oak Ltd, the final company buyer, is connected with Maya Ltd, the original seller. The largest relevant amount across the steps is £700,000. A valuation puts the land’s market value at £900,000 on the effective date. The law cannot use less than £900,000 for the assumed purchase.
Change one fact. If the largest relevant amount is £1 million, the law uses that higher figure instead. Market value is a floor here, not a ceiling.
Why this can be difficult in practice
The arithmetic is often not the difficult part: the analysis must establish whether section 75A applies, identify who is connected, and determine whether an exception changes the outcome. The facts control.
A company distribution can be especially awkward. HMRC says the assumed purchase may keep the character of the real distribution, but only where the facts support that result. Its manual says P would need to be an immediate shareholder of V to retain that character.
- Do not treat HMRC’s manual as the law itself.
- Do not use the cash price without checking market value.
- Do not overlook payments made in another step.
- Do not assume every group-company transfer is a qualifying distribution.
- Do not overlook an earlier group relief claim involving the land.
Key takeaways
- Section 75C(6) brings the connected-company market value rule into section 75A cases.
- For a connected company buyer, the amount cannot be below market value.
- A higher amount found from the arrangement takes priority over market value.
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 75A — when the anti-avoidance rule can apply; the notional direct land purchase; how the notional payment amount is found; the date of the notional purchase
- FA 2003 section 75C — applying connected-company market value rules
- FA 2003 section 53 — market value rule for connected companies; reliefs and exceptions to that rule
- FA 2003 section 54 — exceptions from the market value rule
- an Act of 2010 we do not have an identifier for section 112 — when companies and people are connected (no link: an Act of 2010 we do not have an identifier for)
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
- Whether a notional purchase keeps the character of an original company asset distribution depends on the facts.
- HMRC says an immediate shareholding is needed for a distribution to retain that character, but this is HMRC’s stated view rather than wording found in section 75C(6).
- Whether parties are connected requires the detailed test in Corporation Tax Act 2010 section 1122.
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 diagram and documents showing every step in the arrangement.
- Details of who paid and received money or other value.
- A valuation of the land at the effective date.
- Company ownership records and control information.
- Documents showing whether the transfer was a company asset distribution.
- Details of any earlier group relief claim involving the land.
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 anti-avoidance: connected companies and market value [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 75A - when the anti-avoidance rule can apply https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - the notional direct land purchase https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - how the notional payment amount is found https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - the date of the notional purchase https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75C - applying connected-company market value rules https://www.legislation.gov.uk/ukpga/2003/14/section/75C/2025-11-17 - FA 2003 section 53 - market value rule for connected companies https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 section 53 - reliefs and exceptions to that rule https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 section 54 - exceptions from the market value rule https://www.legislation.gov.uk/ukpga/2003/14/section/54/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - when companies and people are connected Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09290 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 - Whether a notional purchase keeps the character of an original company asset distribution depends on the facts. - HMRC says an immediate shareholding is needed for a distribution to retain that character, but this is HMRC's stated view rather than wording found in section 75C(6). - Whether parties are connected requires the detailed test in Corporation Tax Act 2010 section 1122. 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 anti-avoidance: connected companies and market value
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