Guidance on Share Transfer Exemptions Under Section 75C for Scheme Transactions

When an Earlier Share Transfer Is Ignored for SDLT Anti-Avoidance

HMRC says that, for the SDLT anti-avoidance rule in section 75A, an earlier transfer of existing shares or securities may be ignored if it is wholly a share transfer and happens before any other scheme transaction. If it is ignored, the price paid for those shares is left out when working out the notional chargeable consideration, but this exception is narrow and depends on the exact facts and timing.

• Only a transaction consisting wholly of a transfer of existing shares or securities can fall within HMRC’s exclusion.
• If that share transfer is the first step, or part of a sequence of share transfers before any other scheme transaction, HMRC says it is left out of account.
• The same approach can apply to transfers of units in a unit trust scheme, which HMRC treats similarly to shares for this purpose.
• Routine administrative steps relating only to the share transfer, such as approvals, will not usually prevent the exclusion from applying.
• The exclusion is lost if any other scheme transaction happened first, and it does not apply to an issue of new shares.
• In practice, the main difficulty is deciding whether earlier steps are truly just administrative and whether the transaction is purely a share transfer.

Scroll down for the full analysis.

When an earlier share transfer is ignored for SDLT anti-avoidance purposes

This page explains a narrow but important point in HMRC’s guidance on the SDLT anti-avoidance rule in section 75A. The issue is whether a transfer of shares or securities is counted as one of the “scheme transactions” when working out if section 75A applies. HMRC’s view is that some earlier share transfers are left out of account, but only in a limited set of circumstances.

What this rule is about

Section 75A is aimed at certain arrangements involving land where the overall effect is that a purchaser ends up with the property, but the steps are structured so that less SDLT is paid than would normally be expected. To test whether section 75A applies, it is necessary to identify the relevant “scheme transactions” and then compare the tax result with a notional land transaction.

The page you have provided deals with one specific question within that exercise: what if the arrangement includes a transfer of shares or securities before any land-related scheme step? HMRC says that, in some cases, that earlier share transfer is not treated as a scheme transaction at all for section 75A purposes.

This matters because, if a step is ignored, its consideration is also ignored when calculating the chargeable consideration for the notional transaction between the vendor and the purchaser.

What the official source says

HMRC’s guidance says that a transaction consisting wholly of the transfer of shares or securities is not treated as a scheme transaction for section 75A if, apart from this exclusion, it would be the first in a series of scheme transactions.

HMRC applies the same approach where there are several transfers of shares or securities in sequence. If those transfers all come before any other scheme transaction, they are also ignored.

The guidance says the same treatment applies to transfers of units in a unit trust scheme, because those units are treated as if they were shares for this purpose.

HMRC also says that pre-transfer administrative steps relating only to the share transfer, such as shareholder approval, will not usually be treated as scheme transactions. So those preparatory steps do not normally stop the share transfer from being treated as the first relevant step.

However, the exclusion is lost if some other scheme transaction happens before the share transfer. In that case, the later transfer of shares or securities is not ignored and will be treated as a scheme transaction for section 75A purposes.

Finally, HMRC draws a clear distinction between a transfer of existing shares and an issue of new shares or securities. On this view, only a transfer of existing shares can fall within the exclusion. An issue of shares does not.

What this means in practice

The practical effect is that an early share transfer may be left out of the section 75A analysis altogether. If it is left out, you do not include the price paid for those shares when calculating the chargeable consideration for the notional land transaction that section 75A may impose.

This can make a significant difference. In arrangements involving companies, trusts, or unit trusts, there may be a mixture of share steps and land steps. HMRC’s guidance is saying that not every share movement automatically counts as part of the section 75A chain.

But the exclusion is narrow. It applies only where:

• the transaction consists wholly of a transfer of shares or securities,
• it is the first step in the series, or one of a sequence of share transfers before any other scheme transaction, and
• the shares are existing shares, not newly issued shares.

If there is an earlier non-share scheme transaction, the share transfer is no longer ignored. At that point, it forms part of the section 75A picture in the normal way.

How to analyse it

A sensible way to approach this issue is to ask the following questions in order.

• Is section 75A potentially in point at all? This guidance only matters if you are already considering whether there is a series of scheme transactions connected with a land transaction.
• Is the step you are looking at wholly a transfer of shares or securities? HMRC’s exclusion is framed narrowly. It is not enough that shares are involved somewhere in the step if the transaction is not wholly a transfer of shares or securities.
• Are they existing shares or securities? HMRC says the exclusion does not apply to an issue of shares.
• Does the same reasoning apply because the asset transferred is a unit in a unit trust scheme? HMRC says yes.
• Was this share transfer the first relevant step, or part of a run of share transfers before anything else happened? If yes, HMRC says those transfers are ignored.
• Were there only administrative steps beforehand, and did those steps relate solely to the share transfer? HMRC says such steps will not usually count as scheme transactions.
• Was there some other scheme transaction before the share transfer? If yes, the exclusion does not apply.

Once you have answered those questions, you can decide whether the consideration for the share transfer should be left out of the notional chargeable consideration calculation.

Example

Illustration: Company A owns land. As part of a wider arrangement, an existing shareholder transfers shares in Company A to another person. After that, there is a land-related step that may bring section 75A into play. If the share transfer was wholly a transfer of existing shares and there was no earlier scheme transaction other than routine administrative steps needed to make that transfer happen, HMRC’s view is that the share transfer is ignored for section 75A. The amount paid for the shares would not be included in the chargeable consideration for the notional transaction.

By contrast, if an earlier non-share step had already taken place as part of the scheme, HMRC says the later share transfer would not be ignored. It would then count as a scheme transaction for section 75A purposes.

Why this can be difficult in practice

The main difficulty is identifying what counts as a “scheme transaction” before the share transfer. That is often a fact-sensitive exercise. HMRC says administrative tasks relating solely to the share transfer will not usually count, but the word “usually” matters. A step that appears administrative may need closer examination if it has a wider function in the overall arrangement.

Another difficulty is whether a transaction really consists wholly of a transfer of shares or securities. In complex arrangements, documents and steps may be bundled together. If a step includes more than a pure share transfer, it may be harder to fit within HMRC’s stated exclusion.

The distinction between a transfer of existing shares and an issue of shares is also important. That line may look simple in theory, but in structured transactions it is necessary to identify precisely what legal act has taken place and when.

Finally, this is HMRC manual guidance. It is a statement of HMRC’s view of how section 75A operates. The legal force comes from the legislation itself, and the application of section 75A can be highly sensitive to the exact facts and sequence of events.

Key takeaways

• HMRC says an initial transfer of existing shares or securities can be ignored for section 75A if it comes before any other scheme transaction.
• If the share transfer is ignored, the price paid for the shares is not included in the notional chargeable consideration under section 75A.
• The exclusion does not apply if there was an earlier non-share scheme transaction, and it does not apply to an issue of shares.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Share Transfer Exemptions Under Section 75C for Scheme Transactions

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