Guide on Group Relief Withdrawal When Purchaser Exits Group Within Three Years

When SDLT Group Relief Is Withdrawn After a Company Leaves the Group

If a company buys land from another company in the same group and claims SDLT group relief, that relief can be cancelled if the buyer leaves the seller’s group within 3 years. In that case, SDLT is worked out by looking back at the original land transfer, usually using the property’s market value at that time, not its value when the company is later sold.

• Group relief can reduce or remove SDLT on land transfers between companies in the same group, but it may be clawed back later.
• The relief is usually withdrawn if the buyer company stops being in the same group as the seller within 3 years of the original transfer and no exception applies.
• The SDLT charge is based on what would have been due on the original transfer if group relief had not been claimed.
• Where the original transfer was for no consideration, the calculation may still use the market value of the property at the date of that transfer.
• A later share sale does not create a new SDLT charge based on the property’s later value; later increases in value are ignored.
• This can be important in company sales, because a buyer may inherit an SDLT risk if property was moved into the target company under group relief within the previous 3 years.

Scroll down for the full analysis.

When group relief is withdrawn because the buyer leaves the group within 3 years

This page explains a common SDLT clawback scenario. A company receives land from another group company and claims group relief, but then stops being in the same group as the seller within 3 years. If that happens, the relief can be withdrawn and SDLT becomes payable by reference to the original transfer.

What this rule is about

Group relief can remove or reduce SDLT on a land transfer between companies in the same group. But that relief is not always final. There is a withdrawal rule if the company that bought the land stops being in the same group as the seller within 3 years of the transfer.

The point of the rule is to stop land being moved around a group tax-free and then quickly sold out of the group by selling the company that now owns the land.

What the official source says

The HMRC manual gives an example where:

• A Ltd owns B Ltd outright, so they are in the same group for SDLT purposes.
• A Ltd transfers a freehold property to B Ltd for no consideration.
• B Ltd claims group relief on that transfer.
• Within 3 years, A Ltd sells the shares in B Ltd to an unconnected third party.

HMRC says that group relief is withdrawn because B Ltd, the purchaser, has ceased to be in the same group as A Ltd, the vendor, within the 3-year period, and no exception applies.

In the example, B Ltd still owns the property when it leaves the group. The SDLT due is the amount that would have been payable on the original land transfer. The charge is based on the market value of the property at the effective date of that original transfer. Any later increase in the property’s value is ignored.

What this means in practice

The key practical point is that the later share sale does not create a fresh SDLT charge based on the property’s value at the time the company is sold. Instead, the earlier relief is undone.

So the question is: what SDLT would have been payable on the original transfer if group relief had not been claimed?

In the manual example, the transfer was for no consideration. Even so, the SDLT charge on withdrawal is worked out by reference to the market value at the date of the original transfer. HMRC’s example states that the relevant value was £1,750,000, and that is the figure used for the withdrawn relief calculation.

This matters in transactions involving corporate sales. A buyer of a company that owns property may inherit a latent SDLT exposure if the property was transferred into that company under group relief within the previous 3 years and the conditions for withdrawal are met.

How to analyse it

A sensible way to analyse a possible withdrawal of group relief is to ask these questions:

• Was there an earlier land transfer between group companies on which group relief was claimed?
• Who was the vendor and who was the purchaser in that original land transaction?
• Did the purchaser cease to be in the same group as the vendor within 3 years of the effective date of that transfer?
• If so, does any statutory exception apply? The manual example assumes none does.
• What SDLT would have been payable on the original transfer if relief had not been available?
• What was the relevant market value at the effective date of the original transfer?

The focus stays on the original land transaction. You are not revaluing the property at the date the company leaves the group. You are revisiting the earlier transfer and removing the relief that was claimed then.

Example

Illustration: Parent company P Ltd transfers a warehouse to its wholly owned subsidiary S Ltd. No money is paid, and S Ltd claims group relief. Two years later, P Ltd sells all the shares in S Ltd to an outside buyer. If no exception applies, S Ltd has left the same group as P Ltd within 3 years, so the earlier group relief is withdrawn.

The SDLT charge is then calculated as if relief had not applied to the original warehouse transfer. If the warehouse was worth £2 million when it was transferred, that original value is the relevant starting point. It does not matter if the warehouse is worth more by the time S Ltd is sold.

Why this can be difficult in practice

The broad rule is simple, but real transactions can be more complicated.

First, the timing matters. The 3-year period runs from the date of the original land transaction, so the exact effective date can be important.

Second, the legal question is whether the purchaser ceased to be in the same group as the vendor. In straightforward parent-subsidiary cases this may be obvious, but group structures can change in stages.

Third, HMRC’s example says that no exception applies, but it does not explain those exceptions on this page. In practice, whether an exception is available may be crucial.

Fourth, readers sometimes assume the SDLT should be based on the value of the property when the company is sold. That is not what HMRC says here. The withdrawal charge looks back to the original transfer and the value at that time.

Key takeaways

• If the buyer in an intra-group land transfer leaves the seller’s group within 3 years, group relief may be withdrawn.
• The SDLT charge is based on what would have been due on the original transfer, usually using the original market value where that is the relevant basis.
• Later changes in the property’s value do not affect the withdrawal calculation described in HMRC’s example.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Group Relief Withdrawal When Purchaser Exits Group Within Three Years

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