Selling a property business through a new company: HMRC’s SDLT example
In short
HMRC’s example says that moving a property business into a new company before selling that company’s shares can trigger SDLT under section 75A.
- HMRC considers the linked steps together.
- The final share sale can set both the date and likely amount for SDLT.
- The documents and the original plan are central to the result.
Scroll down for the full analysis.
Read the original guidance here:
Selling a property business through a new company: HMRC’s SDLT example
Selling a property business through a new company: HMRC’s SDLT example
Putting a property business into a new company before selling its shares may not avoid stamp duty land tax. HMRC’s example says it can look at the whole plan and charge SDLT as if the properties had moved directly between two companies.
What this rule is about
Buying shares in a company, rather than acquiring its land directly, is not normally treated in the same way for SDLT, even where the company’s value comes from that land. That difference can matter for SDLT.
The law contains an anti-avoidance rule that can apply when several connected steps transfer land and leave less SDLT payable than would arise on a straightforward transfer. It targets linked arrangements.
The key question is simple: was the sale of the new company’s shares part of the plan to move the properties? In HMRC’s example, the answer is yes.
What the official source says
This HMRC manual page gives a worked view of section 75A. It is guidance, not the law itself. HMRC says the rule applies to a plan that separates a rental property business from another business, then sells the company holding the rental properties.
- Blue Fire Limited owns White Water Limited.
- White Water has rental properties and development properties.
- Freddie wants only the rental business and its properties.
- Blue Fire puts Fred Limited between itself and White Water through a share exchange.
- White Water distributes the wanted business and properties to Fred Limited.
- White Water’s shares move back to Blue Fire, leaving Fred Limited without a subsidiary.
- Freddie then buys all the shares in Fred Limited.
HMRC says no SDLT is due on the actual steps. The property distribution does not face the normal market-value rule because it is part of a company distribution and meets the stated exception. The other steps, including Freddie’s share purchase, are outside SDLT’s direct scope.
That is not the end of the story. HMRC says section 75A requires the steps to be considered together.
What this means in practice
Section 75A can create a made-up direct property transfer for SDLT purposes. HMRC calls this a notional transaction. It does not rewrite the company documents. It changes how SDLT is worked out.
In the example, White Water is treated as the company giving up the properties. Fred Limited is treated as the company receiving them. Because the share sale was always intended to follow the transfer, it is one of the relevant steps for the section 75A analysis.
- The final share sale can matter even though it happens after the property transfer.
- The last relevant step sets the date for the made-up direct transfer.
- On that date, White Water and Fred Limited are no longer in the same group.
- So the made-up transfer cannot use group relief.
- HMRC says the price Freddie pays for Fred Limited’s shares will likely provide the amount used for SDLT.
- HMRC also says that price cannot be ignored as a minor or incidental payment.
This is the point people can miss: a share sale may be outside SDLT on its own, yet still supply the price used for SDLT under the anti-avoidance rule.
How to analyse it
Start with what happened to the land. Do not begin with the label given to the company sale. Then map every step that helped produce the final result.
- List each property and identify which company owned it before and after the plan.
- Set out every company, share and property transfer in date order.
- Check what the outside buyer wanted to buy from the start.
- Read the sale papers, emails and board records for links between the steps.
- Ask whether the later share sale was needed to deliver the planned result.
- Work out the SDLT due on the actual property steps.
- Compare that with SDLT on a direct transfer from the original company to the new company.
- Identify the last step in the linked plan.
- Check whether the two companies were still in the same group on that date.
- Break down the share price if it also covers cash, debts or assets other than the properties.
A later event is not automatically part of the plan. What matters is its connection with the property transfer. In HMRC’s example, the intended sale of Fred Limited was the reason for setting up the structure.
Example
Here is the structure in the manual, in plain terms. Blue Fire owns White Water. White Water runs both a rental business and a development business. Freddie wants the rental business only.
First, the group creates Fred Limited and moves the rental properties into it. The development business stays with White Water. Blue Fire then holds White Water directly again. Finally, Freddie buys every share in Fred Limited.
HMRC’s view is that the final share purchase is not an isolated event. It completes the planned sale of the rental properties. Section 75A therefore treats White Water and Fred Limited as making a direct property transfer on the date Freddie buys Fred Limited.
The manual gives no price or property values. It does not calculate the SDLT bill. Instead, it says that the amount Freddie pays for Fred Limited’s shares would likely be used when calculating SDLT, despite the absence of stated price or property values. That is HMRC’s view.
Why this can be difficult in practice
Company reorganisations often have real business reasons. That does not by itself decide the SDLT result. The difficult issue is whether the property move and the share sale, despite being separate steps, formed parts of one planned chain from the outset. That question is central.
You might think each step must fail on its own before HMRC can challenge it. HMRC’s example makes the opposite point. Each actual step may produce no SDLT, but the combined result can still bring section 75A into play.
- A buyer’s early interest may show that a later sale was planned from the beginning.
- Informal discussions can matter, not only signed contracts.
- A share price may cover more than the properties, which can make the amount used hard to identify.
- Group relief is tested at the relevant date, not simply when the properties first move.
- The distribution exception needs checking, including the history of any group-relief claim.
- Changing the order of steps may change the analysis, but does not itself solve the problem.
Keep the documents that explain the commercial story. They may be the best evidence of whether the final sale was already part of the arrangement.
Key takeaways
- HMRC says section 75A can apply to a planned property-business carve-out and share sale.
- A later share sale can be part of the same plan as an earlier property transfer.
- The share-sale price may be used to work out SDLT on a made-up direct transfer.
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 42 — stamp duty land tax on land transactions
- FA 2003 section 43 — what counts as a land transaction
- FA 2003 section 48 — land rights within the stamp duty rules
- FA 2003 section 53 — market value rule for connected companies
- FA 2003 section 54 — distribution exception to the market value rule
- FA 2003 section 75A — anti-avoidance rule for connected transaction steps; later steps that can form part of arrangements; amount used for the deemed direct transfer; date of the deemed direct transfer
- FA 2003 section 75B — ignoring payment for merely incidental steps; steps that cannot be merely incidental
- FA 2003 section 75C — relief available on the deemed direct transfer; market value rule applied to deemed transfers
- FA 2003 Schedule 7 para 1 — group relief for companies in the same group
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 says the share-sale price would likely be the amount used for the deemed direct transfer. The answer may differ if payments cover assets or rights other than the property business.
- The example does not state the property values, share price, dates or transaction documents. Those facts can affect the tax calculation and the application of the anti-avoidance rule.
- The manual does not give a complete analysis of every possible relief or tax charge arising from the wider reorganisation.
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 signed sale agreement and any heads of terms with the outside buyer
- Board minutes, emails and restructuring papers showing when the sale was planned
- The share-for-share exchange documents and share transfer records
- The property transfer or distribution documents
- The group chart before and after every step
- A breakdown of the price paid for the shares and the assets represented by that price
- Details of any earlier group-relief claim involving the properties
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 Selling a property business through a new company: HMRC's SDLT example [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 42 - stamp duty land tax on land transactions https://www.legislation.gov.uk/ukpga/2003/14/section/42/2025-11-17 - 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 48 - land rights within the stamp duty rules https://www.legislation.gov.uk/ukpga/2003/14/section/48/2025-11-17 - 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 54 - distribution exception to the market value rule https://www.legislation.gov.uk/ukpga/2003/14/section/54/2025-11-17 - FA 2003 section 75A - anti-avoidance rule for connected transaction steps https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - later steps that can form part of arrangements https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - amount used for the deemed direct transfer https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75A - date of the deemed direct transfer https://www.legislation.gov.uk/ukpga/2003/14/section/75A/2025-11-17 - FA 2003 section 75B - ignoring payment for merely incidental steps https://www.legislation.gov.uk/ukpga/2003/14/section/75B/2025-11-17 - FA 2003 section 75B - steps that cannot be merely incidental https://www.legislation.gov.uk/ukpga/2003/14/section/75B/2025-11-17 - FA 2003 section 75C - relief available on the deemed direct transfer https://www.legislation.gov.uk/ukpga/2003/14/section/75C/2025-11-17 - FA 2003 section 75C - market value rule applied to deemed transfers https://www.legislation.gov.uk/ukpga/2003/14/section/75C/2025-11-17 - FA 2003 Schedule 7 para 1 - group relief for companies in the same group https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/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/sdltm09430 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 says the share-sale price would likely be the amount used for the deemed direct transfer. The answer may differ if payments cover assets or rights other than the property business. - The example does not state the property values, share price, dates or transaction documents. Those facts can affect the tax calculation and the application of the anti-avoidance rule. - The manual does not give a complete analysis of every possible relief or tax charge arising from the wider reorganisation. 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: Selling a property business through a new company: HMRC’s SDLT example
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