Withdrawal of Relief for Non-Exempt Transfers After Intra-Group Exemptions

When SDLT reconstruction or acquisition relief can be withdrawn after an intra-group transfer

This SDLT clawback rule can apply where reconstruction relief or acquisition relief was claimed on a land transfer, an exempt intra-group share transfer happened later, and then a company holding shares in the acquiring company leaves the same group as the target company within the relevant period. If the conditions are met, the earlier relief may be withdrawn in full or in part and SDLT becomes payable.

• The rule is aimed at indirect changes in control where relieved land could end up outside the intended group structure within three years of the original land transaction.
• It applies only if there was an earlier exempt intra-group transfer and the relief was not already withdrawn under the separate rule for that event.
• A key condition is that a company holding shares in the acquiring company, or related shares derived from the exempt transfer, leaves the target company’s group within three years, or under arrangements made within that period.
• The clawback normally applies only if, at the time of that group exit, the acquiring company or a relevant associated company still holds the original land interest or an interest derived from it.
• The rule may not apply if the land interest has since been acquired at market value in a chargeable transaction where reconstruction or acquisition relief was available but not claimed.
• In practice, you need to review the full transaction history, group changes, timing, and whether the relief should be withdrawn fully or only in an appropriate proportion.

Scroll down for the full analysis.

When reconstruction or acquisition relief can be withdrawn after an intra-group transfer

This page explains a specific SDLT clawback rule. It applies where reconstruction relief or acquisition relief was originally claimed on a land transfer, an exempt intra-group share transfer later happened, and then a further transfer causes a company holding shares in the acquiring company to leave the target company’s group. The rule is aimed at cases where land that benefited from relief could end up under outside control within three years.

What this rule is about

Reconstruction relief and acquisition relief can reduce or remove SDLT on certain corporate transactions. But those reliefs are not always final. The legislation contains withdrawal rules to stop relief being preserved where the transaction is followed by steps that effectively move the benefit outside the intended group structure.

The particular rule here deals with an indirect change in ownership. The concern is not simply that the acquiring company changes hands. Instead, it is that after an exempt intra-group transfer, a company holding shares in the acquiring company later leaves the same group as the target company. If that happens in the right circumstances, the earlier relief can be withdrawn.

What the official source says

HMRC says this withdrawal rule applies where all of the following features are present:

• The acquiring company claimed reconstruction relief or acquisition relief on the original relevant land transaction.
• There was later an exempt intra-group transfer, but relief was not withdrawn at that stage under the earlier rule dealing with exempt intra-group transfers.
• A company that holds shares in the acquiring company, or shares derived from shares affected by that exempt intra-group transfer, later ceases to be in the same group as the target company.
• That happens within three years of the effective date of the original land transaction, or under arrangements made within that three-year period.
• At the time that company leaves the group, the acquiring company or a relevant associated company still holds the chargeable interest transferred on the original transaction, or an interest derived from it.
• The interest has not in the meantime been acquired at market value under a chargeable land transaction where reconstruction or acquisition relief was available but not claimed.

If those conditions are met, the original reconstruction or acquisition relief is withdrawn, in whole or in an appropriate proportion, and SDLT becomes chargeable.

What this means in practice

The rule is designed to prevent a relieved transaction from being preserved by using an exempt intra-group transfer as an intermediate step, followed by a later movement of the relevant company out of the group.

The key practical point is that HMRC is looking at the wider sequence, not just the original land transfer. Even if relief survived an exempt intra-group transfer, that does not mean the position is safe for the rest of the three-year period.

You therefore need to track three things after the original relieved transaction:

• changes in the group relationship between the target company and companies holding shares in the acquiring company
• whether those changes happen within three years, or under arrangements made within that period
• whether the land, or an interest derived from it, is still held within the relevant part of the structure when the group change happens

The rule is also narrower than a simple “any group exit causes clawback” rule. It only bites if the acquiring company or a relevant associated company still holds the original land interest, or an interest derived from it, at the relevant time. If the land has already been acquired at market value in a qualifying chargeable transaction where relief was available but not claimed, that can prevent this withdrawal rule from applying.

How to analyse it

A sensible way to approach this is to work through the transaction history in order.

1. Identify the original relevant land transaction.
   • Was reconstruction relief or acquisition relief actually claimed by the acquiring company?
   • What was the effective date of that land transaction?
2. Check whether there was an exempt intra-group transfer afterwards.
   • If so, confirm that relief was not already withdrawn under the separate rule dealing with that event.
3. Identify the later company movement.
   • Which company ceased to be a member of the same group as the target company?
   • Did that company hold shares in the acquiring company, or shares derived from shares connected with the exempt intra-group transfer?
4. Test the timing.
   • Did the departure happen within three years of the effective date of the original land transaction?
   • If not, was it carried out in pursuance of, or in connection with, arrangements made within that three-year period?
5. Check whether the relevant land interest was still held.
   • At the time of the group exit, did the acquiring company or a relevant associated company still hold the original chargeable interest, or an interest derived from it?
6. Consider whether the market value exception applies.
   • Has the interest since been acquired at market value by a chargeable land transaction where reconstruction or acquisition relief was available but not claimed?
7. If the conditions are met, consider the amount withdrawn.
   • The source says the relief, or an appropriate proportion of it, is withdrawn. That means the clawback may not always be all-or-nothing.

Example

Illustration only.

Company A acquires land from Company T in a transaction that qualifies for acquisition relief, and relief is claimed. Later, there is an exempt intra-group transfer involving shares, but the relief is not withdrawn at that point. Within three years of the original land transaction, Company H, which holds shares in Company A, leaves the same group as Company T. At that time, Company A still holds the land acquired on the original relieved transaction.

On those facts, this rule may withdraw the earlier acquisition relief. The reason is that a company holding shares in the acquiring company has left the target company’s group within the relevant period, and the relieved land interest is still held in the structure.

Why this can be difficult in practice

This area can be technical because the rule depends on the interaction of several company and land transaction events.

In particular, difficulty often arises over:

• working out whether shares are “derived from” shares to which the exempt intra-group transfer relates
• deciding whether a later step was “in pursuance of” or “in connection with” arrangements made within the three-year period
• identifying whether the interest still held is the original chargeable interest or an interest “derived from” it
• determining when only an appropriate proportion of relief should be withdrawn rather than the whole amount

The HMRC manual states the outcome of the rule, but not every factual boundary. In a real case, the detailed corporate steps, timing, and documentation may matter a great deal.

Key takeaways

• Relief can still be clawed back after an exempt intra-group transfer if a company holding shares in the acquiring company later leaves the target company’s group.
• The main time limit is three years from the effective date of the original relieved land transaction, but arrangements made within that period can also matter.
• The rule only applies if the relevant land interest, or an interest derived from it, is still held at the time of the later group exit, subject to the market value acquisition exception described by HMRC.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Withdrawal of Relief for Non-Exempt Transfers After Intra-Group Exemptions

View all HMRC SDLT Guidance Pages Here