SDLT and stamp duty: hive-outs before a company sale
Hive-outs before a share sale
HMRC says that moving unwanted properties to a parent company does not automatically trigger section 75A before a sale of the remaining company’s shares.
- Separate the property transfer from the share sale.
- Check whether the share sale affects the properties moved out.
- Test any group relief claim separately.
Scroll down for the full analysis.
Read the original guidance here:
SDLT and stamp duty: hive-outs before a company sale
Moving unwanted properties out of a company before selling its shares does not, by itself, trigger the SDLT anti-avoidance rule in HMRC’s example. The key question is whether the share sale has anything to do with the property transfer. That distinction can decide the stamp duty result.
What this rule is about
A buyer may seek to acquire a company while wanting only some of the properties it owns. The company can first move the unwanted properties to its parent company. The buyer then buys the shares in the smaller company.
This is often called a hive-out. It sounds like one overall deal. Yet the tax analysis starts by separating the steps and asking what each step actually does.
Section 75A is an anti-avoidance rule. Broadly, it can apply where a series of connected steps produces less SDLT than a direct property sale would have produced.
That does not mean every company reorganisation is caught. The connection between the steps matters.
What the official source says
HMRC gives an example involving Gold Nutmeg Limited, which owns 15 properties. Yellow Acorn Limited wants to buy all its shares, while wanting the company, after the purchase, to retain only five named properties rather than all 15 properties that Gold Nutmeg owns.
- Gold Nutmeg transfers the other 10 properties to its parent company.
- Yellow Acorn then buys all the shares in Gold Nutmeg.
- Yellow Acorn pays stamp duty on the share purchase.
- HMRC says section 75A does not apply to the transfer of the 10 properties on those facts.
Why? HMRC says that, in the internal transfer, the only property rights acquired are those in the 10 properties that Gold Nutmeg moved to its parent company. The later share sale concerns the other five properties.
On HMRC’s view, buying Gold Nutmeg’s shares does not affect the transfer of the 10 properties. So it is not a connected step for section 75A in this example.
- The property transfer and the share sale must be looked at separately.
- The share sale must not affect the transfer of the properties moved out.
- The result follows only from the facts that HMRC gives.
- HMRC indicates that the same principle should apply where the internal transfer is made for a payment and group relief is claimed.
What this means in practice
You cannot resolve this point merely by saying that the steps happened close together, because a share sale following a hive-out is not automatically part of the relevant arrangement. Timing alone is not enough.
What actually matters is whether the buyer’s share purchase changes the earlier transfer of land, helps bring it about, or is otherwise connected with it in the arrangement. That is the test.
In HMRC’s example, it does not. The buyer only buys the company holding the five retained properties. It does not acquire the 10 properties moved to the parent.
- List which properties the buyer wants the company to retain.
- Identify exactly which properties are transferred out.
- Check who owns each property before and after each step.
- Keep documents showing why the unwanted properties were removed.
How to analyse it
Start with the property transfer, not the label given to the deal. Then compare that transfer with the later share sale. This is the part people can miss.
- Who transfers each property, and who receives it?
- Which properties remain in the company being sold?
- What does the eventual buyer receive: land, shares, or both?
- Does the share sale affect the transfer of the properties moved out?
- Are there agreements, promises or payments linking the two steps?
- If group relief is claimed, do the separate relief conditions hold?
Group relief is a separate issue. It can apply to a transfer between companies in the same group, but the law also places limits on the relief. The manual example assumes that relief is claimed; it does not prove that every hive-out qualifies.
Example
Imagine Cedar Ltd owns 15 properties. Birch Ltd wants to buy Cedar, but only if it retains five of them. Cedar transfers the other 10 properties to its parent. Birch then buys Cedar’s shares and pays stamp duty on those shares.
Using HMRC’s stated reasoning, the share sale does not make section 75A apply to the transfer of the 10 properties if it has no impact on that transfer. Birch has bought shares in the company that kept five properties, not the 10 properties already moved out.
Change one fact, though, and the answer may need fresh work. For example, documents that make the internal transfer conditional on the share sale could show a closer link.
Why this can be difficult in practice
Real deals rarely come in three neat sentences. They may include heads of terms, funding arrangements, conditions, side letters and several companies. Those details can matter far more than the word “hive-out”.
You might think an internal transfer is enough to settle the issue. It is not. The full arrangement may show that the buyer is involved with the properties moved out after all.
- A shared timetable does not by itself answer the question.
- Common ownership before the transfer does not by itself settle group relief.
- A payment for the transfer needs separate review.
- Documents may reveal links not obvious from the final ownership chart.
Key takeaways
- HMRC says its stated hive-out example does not trigger section 75A.
- The outcome turns on the link between the property transfer and share sale.
- Group relief and section 75A are separate questions.
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 — anti-avoidance rule for connected land transaction arrangements
- FA 2003 Schedule 7 para 1 — group relief for transfers between group companies
- FA 2003 Schedule 7 para 2 — limits on when group relief is available
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 example does not give the agreements, dates, values or wider commercial arrangements.
- It does not decide whether group relief is available in a real transaction.
- The relevant transaction date is needed before applying the law to a live arrangement.
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 company structure before and after the property transfer
- The list of properties transferred out and retained
- The share sale agreement and related documents
- Board minutes and documents explaining the commercial purpose
- The terms and value of any payment for the property transfer
- Evidence that the conditions for group relief are met, if 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 SDLT and stamp duty: hive-outs before a company sale [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 - anti-avoidance rule for connected land transaction arrangements https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 Schedule 7 para 1 - group relief for transfers between group companies https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - limits on when group relief is available https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09410 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 example does not give the agreements, dates, values or wider commercial arrangements. - It does not decide whether group relief is available in a real transaction. - The relevant transaction date is needed before applying the law to a live arrangement. 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: SDLT and stamp duty: hive-outs before a company sale
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