Group Relief Restrictions: No Relief for Purchaser in Certain Arrangements

When SDLT Group Relief Is Blocked by Wider Arrangements

SDLT group relief is not available just because the buyer and seller are in the same group when land is transferred. Relief can be denied if, at the effective date, there are wider arrangements under which control of the buyer could change, a person outside the group provides or receives any of the consideration, or the buyer leaves or could leave the group.

• Group relief may be blocked if arrangements exist for someone to obtain control of the purchaser, but not the vendor, even if those arrangements are never carried out.
• Relief can also be denied where a non-group person provides or receives all or part of the consideration, whether directly or through linked or indirect payments.
• If the purchaser ceases, or could cease, to be in the same group as the vendor under connected arrangements, group relief is usually not available.
• The key time is the effective date of the land transaction, so all agreements, plans, funding steps and sale arrangements in place at that date should be reviewed.
• In practice, you must look beyond the transfer itself and consider the wider deal structure, including contingent rights, external funding and possible future sales.

Scroll down for the full analysis.

When SDLT group relief is blocked by arrangements affecting control, consideration or group membership

This page explains when SDLT group relief is not available even though the buyer and seller are in the same group at the time of the land transfer. The rule is aimed at cases where wider arrangements mean the transfer is really part of a change of ownership, funding, or group structure that takes it outside the normal policy of group relief.

What this rule is about

Group relief can remove or reduce SDLT on land transfers between companies in the same group. But the relief is not automatic. The legislation restricts it where there are arrangements connected with the transaction that suggest the property is being moved within the group as part of a wider deal.

The material here deals with three blocking rules. In broad terms, relief is denied if, at the effective date of the land transaction, there are arrangements under which:

• someone could obtain control of the purchaser, but not of the vendor;
• a person outside the group is to provide or receive some or all of the consideration for the transaction; or
• the purchaser ceases, or could cease, to be in the same group as the vendor.

These rules matter because a transaction can look like an ordinary intra-group transfer on its face, but still fail for relief once the surrounding arrangements are taken into account.

What the official source says

HMRC’s manual says that no group relief is available to the purchasing company in three situations.

First, relief is denied where arrangements exist which would mean that a person, or persons, could obtain control of the purchaser but not of the vendor. The key time is the effective date of the land transaction. The arrangements must be in existence at that date, and they must be such that control of the purchaser could be obtained on or after that date. HMRC also makes the point that it does not matter whether those arrangements are actually used.

Second, relief is denied where, in connection with, or in pursuance of, arrangements, a non-group company or other person is to provide or receive all or part of the consideration for the transaction. HMRC says this applies whether the consideration is provided or received directly or indirectly, whether or not the vendor, purchaser or another group company is party to the arrangements, and where the result is that part of the consideration is provided or received through one or more transactions involving payments by a person outside the group.

Third, relief is denied where, in connection with, or in pursuance of, arrangements, the purchaser ceases, or could cease, to be in the same group as the vendor. HMRC explains this by reference to the purchaser ceasing, or potentially ceasing, to be a 75% subsidiary of the relevant parent so that it is no longer in the same group as the vendor.

What this means in practice

The practical question is not just whether buyer and seller are in the same group when the property is transferred. You also need to ask whether there is a wider plan in place.

If the purchaser is going to be sold out of the group, or could be sold out of the group, that may block relief. If an outsider is funding the price, receiving part of the price, or doing so through linked steps, that may also block relief. If someone is positioned to take control of the purchaser without also taking control of the vendor, that too may block relief.

This is an anti-avoidance style restriction. It looks beyond the immediate transfer document and asks whether the land transfer is part of a broader arrangement.

The rule about control is particularly important. HMRC’s wording makes clear that the arrangements do not need to be carried out. It is enough that they exist at the effective date and would allow control of the purchaser to be obtained on or after that date. So a transaction can fail even if the later sale or control change never actually happens.

The rule about consideration is also wider than a simple question of who pays the purchase price on completion. It catches direct and indirect provision or receipt of consideration, and it can apply through a chain of connected payments.

How to analyse it

A sensible way to analyse the point is to work through these questions.

1. Are the buyer and seller in the same group at the time of the transfer?

This is the starting point for group relief, but it is only the beginning. Even if the group test is met, relief may still be denied by the restrictions covered here.

2. What arrangements existed at the effective date?

The legislation, as described by HMRC, focuses on arrangements that are in existence at the effective date of the land transaction. You should identify all relevant agreements, side letters, board-approved plans, sale processes, funding steps and conditional transactions that exist at that point.

3. Could those arrangements result in control of the purchaser changing, without the vendor also being brought under that control?

If yes, group relief may be blocked. The issue is not limited to completed sales. The question is whether a person or persons could obtain control of the purchaser under the arrangements.

4. Is any part of the consideration coming from, or going to, someone outside the group?

Look beyond the immediate payment mechanics. Consider indirect funding, reimbursement arrangements, circular payments, and linked transactions. HMRC’s view is that the restriction is not avoided simply because the outsider does not pay the vendor directly.

5. Is there an arrangement under which the purchaser leaves the group, or might leave the group?

If the purchaser ceases, or could cease, to be in the same group as the vendor in connection with the arrangements, relief is denied. The use of “could cease” means the legislation can apply even where the future separation is contingent rather than certain.

6. Is the connection between the arrangement and the land transfer strong enough?

The manual refers to arrangements “in connection with” or “in pursuance of” which the relevant outcome happens. That language is broad. In practice, the closer the funding, control change or degrouping step is to the land transfer, the more likely the restriction is to apply.

Example

Illustration: Company V and Company P are in the same group. Land is transferred from V to P. On the same day, there is a pre-existing sale process under which an outside buyer can acquire the shares in P, but not the shares in V, after completion. Even if the share sale has not yet happened, and even if it later falls through, HMRC’s published view is that group relief is not available if those arrangements existed at the effective date and would allow control of P to be obtained.

Another illustration: V transfers land to P, claiming group relief. Under connected arrangements, part of the purchase funding is effectively provided by a non-group person through linked transactions rather than by a direct payment to V. The manual indicates that this can still deny relief, because indirect provision of consideration is within the restriction.

Why this can be difficult in practice

The difficult part is usually identifying what counts as an “arrangement” and how far the connection with the land transfer goes. Official manuals often state the rule briefly, but real transactions may involve phased deals, conditional steps, external finance, internal reorganisations and sale options that do not fit neatly into one box.

There can also be uncertainty around future possibilities. The manual says relief is denied where the purchaser ceases or could cease to be in the same group, and where a person could obtain control of the purchaser. That can bring in contingent or unexercised rights, depending on the facts and the legal effect of the arrangements in place at the effective date.

Another practical difficulty is that the consideration rule is deliberately wide. It is not limited to obvious third-party payments. Indirect funding or receipt through linked transactions may be enough, so the analysis needs to cover the full money flow, not just the completion statement.

Finally, it is important not to treat HMRC’s manual as if it were the legislation itself. The manual is HMRC’s explanation of how the statutory restriction operates. The legal answer still depends on the wording of the legislation and the facts of the transaction.

Key takeaways

• Being in the same group at the time of transfer is not enough on its own to secure SDLT group relief.
• Relief can be denied if existing arrangements involve a future control change in the purchaser, outsider involvement in the consideration, or the purchaser leaving the group.
• The analysis must look at the wider transaction structure in place at the effective date, including indirect steps and contingent outcomes.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Group Relief Restrictions: No Relief for Purchaser in Certain Arrangements

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