Group Relief Withdrawal: Purchaser Exits Group Within 3 Years, Property Transferred

When later intra-group SDLT payment prevents further group relief clawback

Group relief on an intra-group land transfer can be at risk if the original buyer leaves the seller’s group within three years. However, HMRC’s example shows that if the same property was later transferred within the group in a transaction where group relief could have been claimed but was not, and SDLT was actually paid, there may be no further SDLT to pay when the original buyer later leaves the group.

• Group relief can be withdrawn if the buyer in the original relieved transfer leaves the seller’s group within three years.
• HMRC gives an example where the same property is later transferred to another group company at market value and SDLT is paid on that later transfer.
• In that example, although the original relief may technically be withdrawn, no extra SDLT is payable after the group exit.
• The point depends on the later transfer being of the same property, with group relief available but not claimed, and SDLT actually paid.
• This is especially relevant in group reorganisations and share sales where property has been moved between subsidiaries before a company leaves the group.
• The position is fact-sensitive, and HMRC’s manual example does not automatically apply to different facts or replace the legislation.

Scroll down for the full analysis.

When group relief is not clawed back because the property was later transferred within the group and SDLT was paid

This page explains a narrow but important SDLT point. Group relief can be withdrawn if the company that bought the property leaves the seller’s group within three years. But that is not always the end of the story. If the property was later transferred to another group company in a transaction on which SDLT was actually paid, there may be no further SDLT to pay when the original buyer later leaves the group.

What this rule is about

Group relief is designed to remove an SDLT charge on certain land transfers within a corporate group. The relief is valuable, but it comes with conditions. One of the main conditions is that the buyer must remain in the same group as the seller for a period after the transfer. If that condition is broken, the earlier relief can be withdrawn.

The source material deals with a specific sequence:

• a company acquires land from another group company and claims group relief;
• it later transfers the same property to a different group company;
• that later transfer could also have qualified for group relief, but relief is not claimed and SDLT is paid instead;
• the original buyer then leaves the group within three years of the first transfer.

The question is whether SDLT becomes payable because the original relief is withdrawn. The official example says that, in this situation, there is no further SDLT to pay.

What the official source says

The HMRC manual gives this example:

• A Ltd owns B Ltd, and B Ltd owns C Ltd. All three are in the same SDLT group.
• A Ltd transfers land worth £1,000,000 to B Ltd for no consideration. B Ltd claims group relief on that transfer. This is the relevant transaction.
• Four months later, B Ltd transfers the same land to C Ltd for £1,100,000. At that time the property is worth £1,100,000.
• C Ltd could have claimed group relief on that second transfer, but does not. SDLT is paid on it.
• Within three years of the first transfer, A Ltd sells the shares in B Ltd to an unconnected third party. B Ltd leaves A Ltd’s group, and C Ltd leaves with B Ltd because it is B Ltd’s subsidiary.

HMRC says that group relief on the first transfer may be withdrawn because B Ltd, the purchaser in the relevant transaction, left the same group as A Ltd within three years.

However, HMRC then says that the property from the first transfer had already been the subject of a later acquisition by C Ltd at market value, on a transaction for which group relief was available but not claimed. Because SDLT was paid on that later transaction, there is no further SDLT to pay.

What this means in practice

The practical point is that a later fully taxed transfer of the same property within the group can effectively absorb the SDLT exposure that might otherwise arise when the original buyer leaves the group.

That does not mean the earlier group relief was never at risk. HMRC’s example still says the relief may be withdrawn. The important practical result is different: despite that withdrawal risk, no extra SDLT is due because there has already been a later market-value transaction on which SDLT was paid and group relief was available but not used.

In simple terms, the tax system does not charge SDLT again where the property has already passed through a later chargeable transaction within the group and tax was actually paid on that later transfer.

This matters in reorganisations and exits. Groups sometimes move property between subsidiaries before a sale of shares. If an earlier intra-group transfer used group relief, and there is later a departure from the group within three years, you need to check whether the property was subsequently transferred again in a way that changes the SDLT outcome.

How to analyse it

A sensible way to analyse this type of case is to ask the following questions in order:

• What was the original transfer on which group relief was claimed? Identify the buyer, the seller, the property, and the date.
• Did the original buyer leave the seller’s group within three years of that transfer? If yes, withdrawal of relief may need to be considered.
• Before that group exit happened, was the same property transferred again to another company in the group?
• Was that later transfer made for market value, or at least treated in the example as a market-value acquisition?
• Could group relief have been claimed on that later transfer?
• Was group relief in fact not claimed on that later transfer?
• Was SDLT actually paid on that later transfer?

If the answer to those later questions is yes, HMRC’s example indicates that there is no further SDLT to pay when the original buyer leaves the group.

The emphasis in the example is not just on there being a later transfer. It is on there being a later acquisition at market value, on which group relief was available but not claimed, and where SDLT was paid at the time.

Example

Illustration based on the official example:

Parent Ltd transfers land to Subsidiary 1 Ltd and claims group relief, so no SDLT is paid on that first transfer. A few months later, Subsidiary 1 Ltd sells the same land to Subsidiary 2 Ltd. That second transfer could also qualify for group relief, but the group chooses not to claim it and pays SDLT instead.

Later, still within three years of the first transfer, Parent Ltd sells Subsidiary 1 Ltd to an outside buyer. That means Subsidiary 1 Ltd leaves the group, which would normally put the original group relief at risk.

On HMRC’s approach in the source material, there is no further SDLT to pay, because the property had already been transferred again in a later transaction on which SDLT was paid and group relief was available but not used.

Why this can be difficult in practice

This area can be easy to misread.

First, the example does not say that every later intra-group transfer prevents a clawback. The facts are specific. The later transfer was of the same property, at market value, and SDLT was actually paid because relief was not claimed.

Second, the source is an HMRC manual example, not the legislation itself. It is useful evidence of HMRC’s view and practice, but the legal result must still be grounded in the legislation governing withdrawal of group relief and later chargeable transactions.

Third, the example says the original relief “may be withdrawn” but then concludes that there is “no further SDLT to pay”. That distinction matters. The legal mechanism and the tax outcome are not always the same question.

Fourth, timing and identity matter. You need to track which company was the purchaser in the original relieved transaction, whether that company left the seller’s group within the relevant three-year period, and what happened to the property in the meantime.

Finally, this is fact-sensitive where the later transfer was not at market value, where relief was claimed on the later transfer as well, or where the property transferred later was not the same interest as the one in the original transaction. The source material does not resolve those variations.

Key takeaways

• Group relief can be put at risk if the original buyer leaves the seller’s group within three years.
• If the same property was later transferred within the group in a transaction on which SDLT was paid and group relief was available but not claimed, HMRC’s example says there is no further SDLT to pay.
• The outcome depends on the exact sequence of transfers, the group relationships, and whether the later transaction was a taxed market-value acquisition of the same property.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Group Relief Withdrawal: Purchaser Exits Group Within 3 Years, Property Transferred

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