Stamp duty when a connected company gets property for nothing
In short
A company can face SDLT when it receives property for nothing from a connected company. The property’s market value may replace the zero price.
- Check whether the companies are connected.
- Check for a section 53 exception.
- Value the property on the relevant SDLT date.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a connected company gets property for nothing
Stamp duty when a connected company gets property for nothing
If one company gives a home to another company for nothing, stamp duty can still apply. The key question is whether the companies count as connected. If they do, HMRC can substitute the property’s market value for the £0 price when calculating SDLT.
What this rule is about
Giving property away does not always mean there is no SDLT. The law prevents connected companies from avoiding tax by setting a zero price for transfers between them.
That distinction sounds technical. The rule can move the tax figure from nothing to the property’s full value.
What the official source says
HMRC’s manual gives an example where Company C transfers a freehold home to Company B for no payment. HMRC says that, when Company C transfers a freehold home to Company B for no payment, the first issue is whether the companies are connected under the test in the Corporation Tax Act 2010. That question comes first.
- If Company C and Company B are not connected, HMRC treats the transfer as having no amount paid.
- In that example, the no-payment exemption applies.
- HMRC also says that Company B need not submit an SDLT notification in that situation.
- If the companies are connected, HMRC says section 53 governs the transfer.
- Company B then uses the property’s market value on the date that counts for SDLT to work out the tax.
What this means in practice
You cannot assume that a £0 transfer has no stamp duty result. Where the companies are connected, Company B may have to use the property’s market value when calculating SDLT.
That value is not the tax bill. It is the starting figure for the calculation, and the source does not give a tax rate or final tax amount.
- Check the connection between the two companies before treating the transfer as tax-free.
- Get a sound valuation for the relevant SDLT date if section 53 applies.
- Keep records that show there was no cash payment or other benefit.
- Do not confuse a zero price with a zero SDLT value.
How to analyse it
Start with the real steps, not the label on the paperwork. A transfer called a gift may still involve debt, shares, or another benefit that changes the answer.
- Identify the property and the company receiving it.
- Check every form of value given in return, including debt or shares.
- Use the statutory test to decide whether the companies are connected.
- Check whether an exception to section 53 applies.
- Fix the date that counts for SDLT.
- Value the property as at that date if the connected-company rule applies.
- Then work out whether an SDLT return or notification is needed.
Example
Company C transfers a freehold home to Company B and receives nothing in return. The companies are connected. If the home is worth £275,000 on the relevant SDLT date, HMRC’s example treats £275,000 as the figure for the SDLT calculation. It does not say that the SDLT bill is £275,000.
Why this can be difficult in practice
This is the part people get wrong: connection is a legal test, not just a business description. Similar names, shared directors, or a commercial link do not decide the issue; the statutory test does.
Value can also cause trouble. A rushed estimate may not show what the property was worth on the relevant date, particularly where it has unusual features or needs work.
- Money is not the only thing that may count as value for a transfer.
- A market value figure needs to match the correct SDLT date.
- Section 53 has exceptions, which HMRC’s short example does not explore.
- HMRC’s manual explains HMRC’s view; the legislation remains the law.
Key takeaways
- A £0 company transfer can still trigger stamp duty.
- Connection between the companies is the key question.
- For connected companies, market value may replace the zero price.
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 to connected companies
- FA 2003 section 54 — exceptions to the connected-company market value rule
- FA 2003 Schedule 3 para 1 — exemption where no amount is paid
- FA 2003 section 77 — which land transactions need notification to HMRC
- FA 2003 section 77A — exceptions from the SDLT notification requirement
- FA 2003 section 119 — the date that counts for SDLT
- an Act of 2010 we do not have an identifier for section 112 — when companies count as 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 two companies are connected depends on the statutory test and the facts of their relationship.
- Market value can be disputed, especially where the property has unusual features or limited comparable sales.
- The source does not state whether any section 54 exception applies, so it should not be assumed that every connected-company transfer follows the example.
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 deed and records of any money, debt, shares or other benefit
- Documents showing the companies’ ownership and control relationship
- A valuation of the property at the SDLT effective date
- The completion date and any earlier event that could set the SDLT date
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 a connected company gets property for nothing [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 to 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 no amount is paid https://www.legislation.gov.uk/ukpga/2003/14/schedule/3/paragraph/1/2025-11-17 - FA 2003 section 77 - which land transactions need notification to HMRC https://www.legislation.gov.uk/ukpga/2003/14/section/77/2025-11-17 - FA 2003 section 77A - exceptions from the SDLT notification requirement https://www.legislation.gov.uk/ukpga/2003/14/section/77A/2025-11-17 - FA 2003 section 119 - the date that counts for SDLT 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 companies count as connected HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm30223 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 two companies are connected depends on the statutory test and the facts of their relationship. - Market value can be disputed, especially where the property has unusual features or limited comparable sales. - The source does not state whether any section 54 exception applies, so it should not be assumed that every connected-company transfer follows the example. 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 a connected company gets property for nothing
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