Company business transfers: the 0.5% stamp duty relief
Company business transfer relief at a glance
A 0.5% SDLT rate may apply where land moves with a qualifying transfer of a company business. The share terms, any cash payment, the business activity and the deal’s purpose all matter.
- Non-redeemable shares must form part of the payment.
- Cash is limited to 10% of the shares’ nominal value.
- The supplied law also contains trading and commercial-purpose conditions.
Scroll down for the full analysis.
Read the original guidance here:
Company business transfers: the 0.5% stamp duty relief
When one company takes over another company’s business and the deal moves land, stamp duty may be limited to 0.5%. That can cut the bill. But the relief has strict share-payment, business and anti-avoidance conditions.
What this rule is about
This relief is for a corporate reorganisation or takeover. It can apply when one company takes over all or part of another company’s business, moves land as part of that transaction, and connects the land transfer with the business transfer. That connection matters.
It is not a general low stamp duty rate for companies buying property. The land deal must be for, or connected with, the transfer of that business.
Not every company deal qualifies.
What the official source says
HMRC’s manual says that the company taking over the business must give non-redeemable shares for all or part of it. These are shares the holder cannot require the company to buy back.
The company taking over the business may issue the shares to the company whose business it takes over. It may instead issue them to any or all of that company’s shareholders.
- If shares make up only part of the payment, the cash element must not exceed 10% of the shares’ nominal value.
- The company taking over the business may assume, or settle, the other company’s debts.
- The deal can include both permitted cash and those debts.
- The company taking over the business must have no association with another company involved in arrangements about the shares.
- If the company issues shares to shareholders, the company being taken over needs share capital.
- A company limited by guarantee with no share capital will therefore not qualify on that route.
HMRC’s manual is guidance, not the law. The supplied legislation contains two further conditions which the manual extract does not list.
- The transferred business must mainly carry on a trade, rather than mainly deal in land interests.
- The deal must have genuine commercial reasons.
- It must not be part of arrangements mainly designed to avoid tax.
That omission matters.
What this means in practice
When the deal meets all of the legal conditions, the relief limits tax on the connected land deal to 0.5% of the amount paid for it. The company must claim the relief in its SDLT return, or by amending that return.
Numbers do matter. So does the wider deal.
- Check who receives the new shares.
- Check whether the shares can be redeemed.
- Compare any cash with the shares’ nominal value, not simply their market value.
- List every debt that the new company will take on or settle.
- Check whether another company has arrangements concerning the new shares.
- Check what the transferred business actually does day to day.
How to analyse it
Start with the business transfer, not the land title. Ask why the land is moving and whether it is part of the company deal.
- Is one company taking over all or a real part of another company’s business?
- Is the land transfer connected with that business transfer?
- Are non-redeemable shares being issued to the target company or its shareholders?
- If cash is included, is it within the 10% limit?
- Are the only other payments debts being taken on or paid?
- Is there an associated company involved in arrangements about the shares?
- Is the main activity of the transferred business a qualifying trade?
- Do the documents show a genuine commercial reason, rather than a tax-driven plan?
Then look ahead. A later change in who controls the company can cause the relief to be withdrawn in some cases within three years.
Example
Green Ltd takes over a trading business from Oak Ltd. Land used by that business transfers with it. Green Ltd issues £1 million of non-redeemable shares and pays £100,000 in cash. Because the cash equals 10% of the shares’ nominal value, this part of the payment test is met.
Assume the land deal’s taxable amount is £1.1 million and every other condition is met. Tax at 0.5% is £5,500. If the cash were £120,000, the cash limit would be exceeded.
One changed figure can decide it.
Why this can be difficult in practice
A label such as “business transfer” might appear to settle the point, but the documents, payment terms and real activity of the business determine it. Labels alone do not decide it.
A company with no share capital is a common trap. It may still be possible for shares to be issued to the company itself, but issuing them to its members will not meet the stated shareholder route.
- Nominal value is not the same as the price someone might pay for the shares.
- Informal agreements can count as arrangements, even if they are not legally enforceable.
- A property-focused business may fail the separate trading condition.
- A commercial deal can still need clear evidence of its purpose.
- A later sale or restructuring can create a withdrawal risk.
Key takeaways
- This relief is for qualifying company business transfers involving land.
- Shares are central, and any cash payment has a tight limit.
- Read the legislation as well as HMRC’s manual before relying on the 0.5% rate.
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 62 — schedule 7 reliefs and how they are claimed
- FA 2003 Schedule 7 para 8 — 0.5% tax limit for qualifying business transfers; required issue of non-redeemable company shares; permitted cash and debt consideration limits; associated-company restriction and control test; trading-business condition excluding mainly property dealing; commercial-reasons and tax-avoidance conditions
- FA 2003 Schedule 7 para 9 — relief withdrawal following a change of 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 what is transferred is all or part of a company’s business can depend on the facts and transaction documents.
- The supplied statutory text is current only to 17 November 2025. The effective date of the land deal must be checked against the legislation then in force.
- The manual extract does not explain how HMRC applies every statutory condition, including the trading and commercial-purpose tests.
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 agreements and board papers explaining the business transfer.
- The share terms, issue documents and nominal value of the shares.
- A schedule of any cash payment and debts taken on or paid.
- Company ownership records and documents showing related arrangements.
- Evidence of the business’s main activity and commercial purpose.
- Documents showing any later change in control.
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 Company business transfers: the 0.5% stamp duty relief [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 62 - schedule 7 reliefs and how they are claimed https://www.legislation.gov.uk/ukpga/2003/14/section/62/2025-11-17 - FA 2003 Schedule 7 para 8 - 0.5% tax limit for qualifying business transfers https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 8 - required issue of non-redeemable company shares https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 8 - permitted cash and debt consideration limits https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 8 - associated-company restriction and control test https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 8 - trading-business condition excluding mainly property dealing https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 8 - commercial-reasons and tax-avoidance conditions https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/8/2025-11-17 - FA 2003 Schedule 7 para 9 - relief withdrawal following a change of control https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/9/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm23220 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's 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 what is transferred is all or part of a company's business can depend on the facts and transaction documents. - The supplied statutory text is current only to 17 November 2025. The effective date of the land deal must be checked against the legislation then in force. - The manual extract does not explain how HMRC applies every statutory condition, including the trading and commercial-purpose tests. 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: Company business transfers: the 0.5% stamp duty relief
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