SDLT group relief: company links and arrangements
Group relief definitions
SDLT group relief depends on a strict 75% corporate group test and can be blocked by connected arrangements.
- Check shares, profits and winding-up rights
- Review informal as well as written plans
- Keep evidence of the commercial purpose
Scroll down for the full analysis.
Read the original guidance here:
SDLT group relief: company links and arrangements
For stamp duty land tax, group relief can remove tax on a property transfer within a corporate group. But a shared name, a common director or a simple 75% shareholding is not enough. The companies must satisfy several connected tests, and planned future deals can block the relief.
What this rule is about
Where land is transferred between companies that meet the required group relationship, group relief can prevent a tax charge arising solely because property moves within one corporate family. That is its purpose.
The key question is not whether the companies appear connected. It is whether they meet the legal 75% group test on the date that matters for the transfer.
This is where people can go wrong. A parent may own most of a company’s shares but have less than 75% of its rights to profits or assets if the company closes down.
The law also looks beyond the transfer itself. It asks whether there are plans or understandings that mean an outside person could gain control of the buying company, or that the group link will end.
What the official source says
HMRC’s manual says that group relief can apply only where the companies are members of the same group. The legislation says this can happen where one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company.
For this relief, the Schedule uses its own meaning of company: a body corporate. Although Section 100 contains a wider general SDLT definition, that wider definition does not displace the specific definition in Schedule 7. The Schedule definition applies.
- The parent must beneficially own at least 75% of the ordinary share capital.
- It must be entitled to at least 75% of profits available for equity holders.
- On a winding-up, it must be entitled to at least 75% of the assets available for equity holders.
- Ownership may be direct or through one or more other companies.
- Ordinary share capital includes issued shares, apart from fixed-dividend shares with no further profit rights.
- The rules for equity holders come from corporation tax legislation applied by Schedule 7.
HMRC also highlights the separate restrictions on arrangements. In this setting, arrangements has a very broad meaning. It includes a scheme, agreement or understanding, even if nobody could enforce it in court.
- Relief can be blocked if arrangements allow someone to obtain control of the buyer but not the seller.
- An outsider providing or receiving all or part of the payment can also block relief.
- Plans for the buyer and seller to stop being in the same group can also matter.
- The transfer must have genuine commercial reasons.
- A main purpose of avoiding tax can block group relief.
What this means in practice
You need to check more than the percentage shown on a group chart. That chart is a starting point, not the answer.
Look at what each class of shares actually gives its holder. Special dividend rights, preference shares and rights on a winding-up may change the result.
Then look at the wider deal. A plan need not be signed, written down or legally binding before it counts as arrangements. HMRC’s manual makes that point clearly, but it remains guidance rather than law.
- Keep the group chart used at the transfer date.
- Read the company’s articles and any shareholder agreement.
- Check who gets profits and closing-down assets, not only votes.
- Review funding for the property transfer.
- Review planned share sales, options and investor deals.
- Record the commercial reason for moving the property.
How to analyse it
Start with the group relationship. Only after that should you move to the anti-avoidance questions. The tests are separate, so passing one does not cure failure of another.
- Identify the buyer and seller on the relevant date.
- Check that each is a body corporate for this relief.
- Map the direct and indirect ownership chain.
- Test the 75% shares, profits and winding-up assets requirements.
- Check whether both companies have the required link to the same parent.
- List every planned deal connected with the transfer.
- Ask whether an outside person could gain control of the buyer.
- Ask whether the funding or payment involves a person outside the group.
- Check whether the group link is planned to end.
- Consider whether the transfer has real commercial reasons.
Example
Imagine Alder Holdings Ltd owns 80 of 100 ordinary shares in Birch Properties Ltd. Alder also has rights to 80% of Birch’s available profits and, if Birch closes down, to 80% of its available assets. Birch meets the 75% subsidiary test on those facts.
Alder transfers land to Birch. Before the transfer, however, Alder agrees that an outside investor may take control of Birch after the transfer. That agreement could be arrangements that prevent group relief, even though Alder and Birch meet the 75% test on transfer day.
Change one fact: if there is no investor deal, no outside funding and no plan to break the group link, that particular arrangements problem does not arise. The issue falls away. The 75% test may then be met without that particular arrangements problem. Other group relief conditions can still matter.
Why this can be difficult in practice
Corporate groups often have several share classes and layered holding companies. The answer may sit in documents prepared years before the land transfer.
Arrangements are harder still. A signed contract is obvious. A board discussion, a term sheet or an understanding between connected people may be less clear, but the statutory definition is deliberately wide.
- Do not rely only on voting rights.
- Do not assume an unsigned plan is irrelevant.
- Do not treat HMRC’s manual as the law itself.
- Do not assume a later sale is harmless because it happens after the transfer.
- Do not overlook the commercial-purpose and tax-avoidance restriction.
Key takeaways
- SDLT group relief needs a real 75% group relationship, not just a corporate connection.
- Shares, profits and winding-up assets must each meet the 75% test.
- Informal arrangements around funding, control or a future sale can block relief.
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 100 — general meaning of company for SDLT
- FA 2003 Schedule 7 para 1 — basic exemption for transfers within a group; company definition and same-group test; three tests for a 75% subsidiary; indirect ownership through group companies; meaning of ordinary share capital; meaning of equity holders and distributions
- FA 2003 Schedule 7 para 2 — restriction where buyer control may change; restrictions for funding and group exits; commercial purpose and tax avoidance restriction; wide meaning of arrangements and control
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 an overseas or unusual organisation is a body corporate depends on its legal form and governing documents.
- Whether arrangements exist is highly fact-sensitive. Informal discussions and connected steps can matter.
- No transaction date was supplied, so the legislation in force on that date must be checked.
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 group structure on the relevant date
- Share registers and the rights attached to shares
- Articles of association and shareholder agreements
- Documents showing rights to profits and winding-up assets
- Sale plans, funding documents, board papers and informal communications
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 group relief: company links and arrangements [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 100 - general meaning of company for SDLT https://www.legislation.gov.uk/ukpga/2003/14/section/100/2025-11-17 - FA 2003 Schedule 7 para 1 - basic exemption for transfers within a group https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 1 - company definition and same-group test https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 1 - three tests for a 75% subsidiary https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 1 - indirect ownership through group companies https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 1 - meaning of ordinary share capital https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 1 - meaning of equity holders and distributions https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - restriction where buyer control may change https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 - FA 2003 Schedule 7 para 2 - restrictions for funding and group exits https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 - FA 2003 Schedule 7 para 2 - commercial purpose and tax avoidance restriction https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 - FA 2003 Schedule 7 para 2 - wide meaning of arrangements and control 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/sdltm23014 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 an overseas or unusual organisation is a body corporate depends on its legal form and governing documents. - Whether arrangements exist is highly fact-sensitive. Informal discussions and connected steps can matter. - No transaction date was supplied, so the legislation in force on that date must be checked. 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: SDLT group relief: company links and arrangements
Search Land Tax Advice with Google
