Understanding Group Relief and Arrangements in Acquisition Transactions Under Finance Act 1986

SDLT Group Relief Before a Section 75 FA 1986 Acquisition

HMRC says SDLT group relief is not blocked just because an intra-group land transfer is made as part of planning for a company acquisition that falls within section 75 of the Finance Act 1986. This applies where the arrangements would otherwise involve a later change of control or de-grouping, but the normal conditions for group relief must still be met.

• Group relief can apply to land transfers between companies in the same group, but it is normally restricted if there are arrangements for a future change of control or de-grouping.
• HMRC accepts that where arrangements are entered into with a view to a section 75 FA 1986 acquisition, they are not treated as disqualifying control arrangements.
• HMRC also applies that same approach to de-grouping arrangements, even though the legislation does not state this as clearly.
• This means a pre-sale intra-group property transfer will not usually lose group relief simply because the transferee will later be sold out of the group in a section 75 acquisition.
• The point is narrow: it only covers this specific interaction with section 75 FA 1986, and it is important to confirm that the planned acquisition genuinely falls within that provision.

Scroll down for the full analysis.

SDLT group relief where a transfer is made before a section 75 FA 1986 acquisition

This page explains a narrow but important SDLT point about group relief. It deals with cases where land is transferred within a group as part of the steps leading up to a company acquisition that falls within section 75 of the Finance Act 1986. The issue is whether those preparatory arrangements stop group relief from applying. HMRC’s published view is that they do not, even though the acquisition may involve both a change of control and a later de-grouping.

What this rule is about

Group relief can remove an SDLT charge on certain land transfers between companies in the same group. But the relief is restricted if there are arrangements in place that mean the companies will not remain in the right group relationship, or that someone will obtain control in a way covered by the anti-avoidance rules.

The source material looks at a specific concern. A group may transfer property internally just before a corporate acquisition. That acquisition may be one to which section 75 Finance Act 1986 applies. In practice, that often means the buyer is acquiring a company, and the internal land transfer is part of the preparations for that deal.

The question is whether the very fact that the transfer is part of pre-sale planning means there are “arrangements” that block group relief.

What the official source says

The source identifies two kinds of arrangements that matter under Schedule 7 to Finance Act 2003.

The first is “control” arrangements under paragraph 2(1). These are arrangements under which a person could obtain control of the transferee company but not of the transferor.

The second is “de-grouping” arrangements under paragraph 2(2)(b). These are arrangements under which the transferor and transferee will cease to be members of the same group because the transferee will stop being a 75% subsidiary of the transferor or of another group company.

HMRC notes that in many acquisitions to which section 75 Finance Act 1986 applies, both things will happen. There may be a change of control and the companies may also cease to be in the same group.

The key point in the source is this. Paragraph 2(1) contains an express carve-out: arrangements entered into with a view to an acquisition to which section 75 Finance Act 1986 applies are not treated as “control” arrangements that deny group relief. Paragraph 2(2)(b) does not contain the same wording. However, HMRC says paragraph 2 must be read as a whole, and the carve-out must also apply to paragraph 2(2)(b). Otherwise the carve-out for section 75 acquisitions would have little practical effect. HMRC therefore accepts that arrangements entered into with a view to a section 75 acquisition are not “de-grouping” arrangements that deny group relief either.

What this means in practice

If a company transfers land to another group company as part of preparations for a qualifying section 75 FA 1986 acquisition, HMRC’s view is that group relief is not denied simply because:

• someone will obtain control of the transferee but not the transferor, or
• the companies will later cease to be in the same group as a result of that acquisition.

That matters because those facts would otherwise often trigger the “arrangements” restrictions in Schedule 7. Without this interpretation, many routine pre-acquisition reorganisations would fail to qualify for group relief.

So the practical effect of the guidance is that, where the arrangements are entered into with a view to an acquisition to which section 75 FA 1986 applies, those arrangements are not treated as disqualifying arrangements for these purposes.

This does not mean group relief is automatic. The normal conditions for group relief still need to be met. The point covered here is narrower: it addresses whether these particular pre-acquisition arrangements are fatal to the relief.

How to analyse it

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

• Is there an intra-group land transfer that would otherwise qualify for SDLT group relief?
• Are there arrangements in place connected with a planned acquisition?
• Is the planned acquisition one to which section 75 Finance Act 1986 applies?
• Are the arrangements said to be disqualifying because they involve a future change of control, a future de-grouping, or both?
• Were those arrangements entered into with a view to that section 75 acquisition?

If the answer to those questions points to a genuine section 75 acquisition scenario, HMRC’s published position is that the arrangements are not treated as disqualifying under either paragraph 2(1) or paragraph 2(2)(b) of Schedule 7.

The critical link is between the arrangements and the section 75 acquisition. The source does not set out a wider test beyond that. It is therefore important not to stretch the point beyond what HMRC actually says.

Example

Suppose ParentCo owns two subsidiaries, PropCo and TradeCo. Before selling the TradeCo subgroup to a buyer, the group transfers a property from PropCo to TradeCo so that the property sits with the business being sold. The transfer would normally be looked at for SDLT group relief.

The sale arrangements mean that, after completion, the buyer will control TradeCo but not PropCo. TradeCo will also leave the seller’s group. On the face of it, that looks like both a control issue and a de-grouping issue.

HMRC’s view in the source is that if those arrangements were entered into with a view to an acquisition to which section 75 FA 1986 applies, they are not treated as arrangements that deny group relief on the earlier property transfer.

Why this can be difficult in practice

The difficult point is that the legislation, as described in the source, contains an express carve-out for control arrangements but not an equally explicit one for de-grouping arrangements. HMRC resolves that by reading the paragraph as a whole and applying the carve-out to both.

That is an interpretative conclusion, not just a mechanical reading of isolated words. In practice, most readers will want to distinguish between:

• what the legislation expressly says on its face, and
• HMRC’s accepted interpretation of how it should operate in section 75 acquisition cases.

Another practical difficulty is identifying whether the acquisition really is one to which section 75 FA 1986 applies, and whether the arrangements were entered into with a view to that acquisition. The source assumes that point rather than explaining it in detail.

It is also important not to read this as a blanket exemption for all pre-sale or pre-acquisition planning. The source only addresses the specific interaction between Schedule 7 “arrangements” and acquisitions within section 75 FA 1986.

Key takeaways

• HMRC accepts that arrangements entered into with a view to a section 75 FA 1986 acquisition do not, by themselves, deny SDLT group relief.
• This applies not only to change-of-control arrangements under paragraph 2(1), but also to de-grouping arrangements under paragraph 2(2)(b).
• The point is limited: the usual conditions for group relief still matter, and the acquisition must genuinely be one to which section 75 FA 1986 applies.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Group Relief and Arrangements in Acquisition Transactions Under Finance Act 1986

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