Stamp duty when you transfer property to your connected company
In short
A transfer of land to a company connected with the seller can be taxed by reference to market value, even if little or no money is paid.
- Shares issued to the seller can also trigger the rule.
- A gift does not normally escape SDLT under the no-payment exemption.
- Trust and company-distribution exceptions may change the result.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you transfer property to your connected company
Stamp duty when you transfer property to your connected company
Putting property into your own company can trigger stamp duty even when the company pays little or nothing. If you are connected with the company, HMRC usually calculates SDLT using the property’s market value instead. That can produce a tax bill based on far more than the cash that changes hands.
What this rule is about
People often move a buy-to-let, a shop, land or a family property into a company they control. They may receive new shares instead of cash. They may also think a gift means there is no stamp duty.
That is not always right. Finance Act 2003 section 53 stops a low stated price from reducing the SDLT amount when a company and seller have a close connection.
The key question is not simply, “What did the company pay?” It is: “What was the property worth when the SDLT date arrived?”
What the official source says
HMRC’s manual explains that section 53 applies when a company buys the property from a seller connected with it. It also applies where some or all of what the seller receives is shares or securities in a company connected with the seller.
- The buyer must be a company. A company includes any body corporate.
- The seller can be an individual or another company.
- A connection between the seller and the buying company can satisfy one route.
- Another route is that the seller receives shares or securities in a company connected with them.
- SDLT then uses at least the market value of the property at the effective date.
- A gift does not qualify for the normal SDLT exemption for a deal where nothing is paid.
- Other SDLT reliefs or exemptions may still apply if their own conditions are met.
Corporation Tax Act 2010 section 1122 sets the meaning of “Connected”. It provides a defined legal test. More than one shareholder does not by itself make a company unconnected.
The effective date is normally completion. Some deal types have a different SDLT date, so check the valuation date.
What this means in practice
You cannot usually make SDLT disappear by putting a nominal price in the transfer. Nor does giving the property away solve the problem. The tax calculation starts from market value if section 53 applies.
This can matter where land has risen sharply in value. It can also matter if a mortgage, shares or other value forms part of the wider arrangement.
- Get a valuation that relates to the correct SDLT date.
- Record every part of the deal, not just the cash price.
- Check who owns and controls the company before signing.
- Check whether anyone issues or transfers shares or securities.
- Consider any SDLT relief separately; section 53 does not cancel every relief.
How to analyse it
Start with the actual steps, rather than the label used for the arrangement. A document may call a transfer a gift, but the company may still issue shares or take on a debt.
- Identify the land or property being transferred.
- Identify the seller and the company receiving it.
- Work out whether the seller and company are connected under the statutory test.
- List cash, debt, shares, securities and anything else given in return.
- Fix the SDLT effective date and obtain a valuation at that date.
- Test whether one of the three section 54 exceptions applies.
- Check whether another SDLT exemption or relief is available.
- Keep documents that support the connection analysis and valuation.
There are three statutory exceptions. The first covers a company that holds the property as trustee as part of a trust-management business. The second can apply where it holds as trustee and the seller is connected only as settlor. The third concerns a company distributing its assets, including on a winding-up.
The third exception has an important limit: it does not apply if the property, or an interest from which it came, was the subject of a group-relief claim by the selling company within the previous three years.
Example
Amira transfers a warehouse to a company connected with her. The document says the company pays £1. An independent valuation puts the warehouse at £500,000 on the SDLT effective date. If section 53 applies and no separate relief or exception applies, the SDLT calculation uses at least £500,000, not £1.
Now change one fact. The company receives the property as trustee while carrying on a business that includes managing trusts. That falls within one of section 54’s stated exceptions. In that case, section 53 does not impose market value; SDLT is based on the amount actually given instead.
Why this can be difficult in practice
The hard part is often the facts. Family links, share rights, company control and a chain of companies can all affect whether parties are connected. A rushed transfer can also miss value given outside the main contract.
HMRC’s manual adds a point about group relief. HMRC says it does not intend a group-relief claim to block the distribution exception where that relief was later recovered under Schedule 7 paragraph 3, at or before the later transfer’s effective date. That is HMRC’s published view, not extra wording in section 54.
- A £1 transfer price does not necessarily mean SDLT uses £1.
- A gift to a connected company is not covered by the usual no-payment exemption.
- Receiving shares can bring the rule into play.
- A company acting as trustee is not automatically outside the rule; the exact exception matters.
- A past group-relief claim needs careful checking, especially in a corporate reorganisation.
Key takeaways
- A connected company transfer can be taxed on market value.
- Market value is tested at the SDLT effective date.
- Check the section 54 exceptions and any separate relief before reaching a conclusion.
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 53 — market value for transfers involving connected companies
- FA 2003 section 54 — exceptions to the connected-company market value rule
- FA 2003 Schedule 3 para 1 — exemption where nothing is paid for land
- FA 2003 Schedule 7 para 3 — when group relief can later be withdrawn
- FA 2003 section 119 — the date used for SDLT purposes
- an Act of 2010 we do not have an identifier for section 112 — when people and companies are connected (no link: an Act of 2010 we do not have an identifier for)
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 people or companies are connected depends on the detailed statutory test in Corporation Tax Act 2010 section 1122 and the facts of the relationship.
- HMRC says a group-relief claim that has been recovered should not stop the distribution exception. Section 54 itself refers to a claim having been made, so HMRC’s statement should not be treated as the wording of the law.
- The supplied Finance Act 2003 text is current only to 17 November 2025. Current-law status must be checked for a later effective date.
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 transfer document and any agreement for the company to buy the land
- Details of every payment, debt, share issue or share transfer linked to the deal
- Company ownership records and other facts relevant to whether the parties are connected
- A valuation of the land at the SDLT effective date
- Trust documents where the company will hold the land as trustee
- Group-relief records for the land or a parent interest during the previous three years
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 Stamp duty when you transfer property to your connected company [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 53 - market value for transfers involving connected companies https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 section 54 - exceptions to the connected-company market value rule https://www.legislation.gov.uk/ukpga/2003/14/section/54/2025-11-17 - FA 2003 Schedule 3 para 1 - exemption where nothing is paid for land https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 3 - when group relief can later be withdrawn https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 - FA 2003 section 119 - the date used for SDLT purposes https://www.legislation.gov.uk/ukpga/2003/14/section/119/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - when people and companies are connected HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm30220 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 people or companies are connected depends on the detailed statutory test in Corporation Tax Act 2010 section 1122 and the facts of the relationship. - HMRC says a group-relief claim that has been recovered should not stop the distribution exception. Section 54 itself refers to a claim having been made, so HMRC's statement should not be treated as the wording of the law. - The supplied Finance Act 2003 text is current only to 17 November 2025. Current-law status must be checked for a later effective date. 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: Stamp duty when you transfer property to your connected company
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