SDLT group relief: what happens when a company leaves the group
When group relief can be lost
If a company that received group relief later leaves the seller’s group, SDLT may become due on the original land transfer. This can happen even where the land was moved to a subsidiary that leaves with it.
- The key period is three years from the original transfer date.
- Who holds the land when the group changes matters.
- The calculation uses the original market value, not a later increase in value.
Scroll down for the full analysis.
Read the original guidance here:
SDLT group relief: what happens when a company leaves the group
SDLT group relief: what happens when a company leaves the group
Stamp duty group relief can eliminate SDLT when land is transferred between companies in the same group. However, a three-year trap applies: relief may be lost if the buyer later leaves the group while it, or a linked company leaving with it, still holds the land.
What this rule is about
Groups commonly reorganise land internally. These transfers can form part of a wider business structure. Group relief may mean that no SDLT is payable on an internal transfer, provided the companies satisfy the ownership test at the relevant time.
That may not be the end of the position. Where the buyer later separates from the seller’s group, while it or a linked company leaving with it continues to hold the land, the law can revisit the original transfer. Relief may therefore be lost.
Tax is not worked out by reference to the later sale price of the shares. Use the value at the first group transfer.
What the official source says
HMRC’s manual includes an example involving A Ltd, B Ltd and C Ltd. A owns B, while B owns C. Each company is wholly owned within that chain, meaning that all three are in the same group.
A transfers freehold land to B for £1,250,000. At that point, the land is worth £1,000,000. B claims group relief.
- Four months later, B transfers the land to C for £250,000.
- By then, the land is worth £1,100,000.
- C also claims group relief for that transfer.
- A sells its shares in B to an unconnected buyer within three years of A’s transfer to B.
- B leaves A’s group, and C leaves with B because C is B’s subsidiary.
- When the sale occurs, B and C continue to hold the freehold land originally transferred from A to B.
HMRC states that group relief for A’s transfer to B is withdrawn. On those facts, the manual says that no exception applies.
Broadly, the legislation produces that outcome if the buyer leaves the seller’s group within three years, or as a result of arrangements made during that period. It also requires the buyer, or a relevant associated company, to hold the original land or a right derived from it when the group changes.
- For the rule to apply, the original transfer must have received group relief.
- Within the three-year period, or under earlier arrangements, the buyer must leave the seller’s group.
- When the group changes, the buyer or a relevant associated company must still hold the relevant land interest.
- The land must not have been later bought at market value in a qualifying group-relief transfer where relief was available but not claimed.
- Any statutory exception must be considered before deciding that relief is withdrawn.
What this means in practice
A transfer to C alone does not preserve the relief. C counts as relevant. When B leaves, C also leaves A’s group.
This point can easily be missed. The land need not be registered in B’s name when B is sold.
A later increase in value does not increase the SDLT bill resulting from withdrawn relief. HMRC says the tax is the amount that would have been due on A’s original transfer to B, using the £1,000,000 market value on that earlier date.
- The £1,250,000 paid on the original transfer does not set the amount in HMRC’s example.
- The £1,100,000 value when B transfers the land to C does not set it either.
- The £1,750,000 value when A sells B’s shares is also ignored for this purpose.
- The relevant figure is the £1,000,000 market value when A transferred the land to B.
How to analyse it
Begin with the original transfer rather than the later share sale. Then trace ownership of both the companies and the land at every stage.
- Identify the date when the original land transfer took effect.
- Check that the seller and buyer were in the same group on that date.
- Confirm that group relief was claimed for that transfer.
- Map every later share sale, reorganisation and winding-up.
- Ask whether the original buyer left the seller’s group within three years.
- Check whether the original buyer made a plan for that departure during those three years.
- Find who held the land when the group changed.
- Include a company that left the group with the original buyer.
- Check whether a statutory exception applies.
- Obtain reliable market value evidence for the original transfer date.
Example
Imagine A Ltd transfers land worth £1,000,000 to its subsidiary, B Ltd, which claims group relief before transferring the land to its own subsidiary, C Ltd. Four months later, A sells B to an outside buyer.
Because B owns it, C leaves A’s group. If B or C still holds the land at that point, HMRC’s example says that relief on A’s original transfer is withdrawn. For the SDLT calculation, use £1,000,000, the land’s value on the original transfer date. A later value of £1,750,000 does not alter that calculation.
Why this can be difficult in practice
A transfer to another company may appear to solve the problem. It does not if that company leaves the group alongside the original buyer.
Factual work can often be difficult. Share sales may involve several stages. Ownership charts may not show the exact position on every relevant date.
- A sale agreement may have been signed before the three years ended but complete later.
- Earlier arrangements can matter even if the group change happens after three years.
- Land may have been split, leased or otherwise changed before the share sale.
- More than one company may hold parts of the original land interest.
- The available exceptions need separate checking; they should not be assumed.
- A market value report prepared years later may not properly show the earlier value.
Key takeaways
- Group relief can be lost if the buyer leaves the seller’s group within three years.
- Moving land to a subsidiary may not prevent withdrawal.
- Use the original transfer-date market value when working out the tax.
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 Schedule 7 para 1 — when companies qualify for group relief
- FA 2003 Schedule 7 para 3 — when group relief is withdrawn after departure; how tax is worked out after withdrawal; meaning of arrangements and associated company; exceptions and special rules for withdrawal
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 source does not give the date of its example. The law in force on the effective date of a real transfer must be checked.
- Whether a later transfer is at market value, and whether relief was available but not claimed, can affect the withdrawal test.
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.
- Group structure charts and share ownership records before and after each event
- Dates of the original land transfer, later land transfer and share sale
- Documents showing who held the land when the group changed
- Market value evidence at the original transfer date
- Records of any relief claims and the terms of later transfers
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: what happens when a company leaves the group [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 Schedule 7 para 1 - when companies qualify for group relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 3 - when group relief is withdrawn after departure https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 - FA 2003 Schedule 7 para 3 - how tax is worked out after withdrawal https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 - FA 2003 Schedule 7 para 3 - meaning of arrangements and associated company https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 - FA 2003 Schedule 7 para 3 - exceptions and special rules for withdrawal https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm23090c 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 source does not give the date of its example. The law in force on the effective date of a real transfer must be checked. - Whether a later transfer is at market value, and whether relief was available but not claimed, can affect the withdrawal test. 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: what happens when a company leaves the group
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