LBTT Group Relief Guidance for Intra-Group Land Transactions Between Companies

LBTT group relief for property transfers within a corporate group

LBTT group relief can remove the tax charge when Scottish land or buildings are transferred between companies in the same corporate group, but only if strict legal tests are met at the effective date of the transaction and no anti-avoidance rules apply.

• Both the seller and buyer must be bodies corporate and members of the same qualifying group when the transaction takes effect.
• A qualifying group normally requires one company to be a 75% subsidiary of the other, or both to be 75% subsidiaries of the same parent, using tests for share capital, profits and winding-up assets.
• Simple share ownership is not enough on its own; the rules also look at beneficial rights to distributable profits and assets on a winding up.
• Relief can be denied if arrangements allow an outsider to gain control of the buyer, involve consideration coming from or going to someone outside the group, or are linked to the buyer leaving the group.
• A targeted anti-avoidance rule blocks relief where the transfer is not for genuine commercial reasons or forms part of arrangements with a main tax avoidance purpose.
• Security over shares, such as a lender’s share pledge, does not always prevent relief, but the statutory conditions must be met and the lender must not have exercised its rights.

Scroll down for the full analysis.

LBTT group relief for transfers within a corporate group

This page explains when Land and Buildings Transaction Tax (LBTT) relief may be available if land or buildings are transferred between companies in the same group. The relief can remove the LBTT charge on an intra-group transfer, but only if strict conditions are met and a number of anti-avoidance restrictions do not apply.

What this rule is about

Group relief is designed to allow property to be moved around a genuine corporate group without triggering LBTT simply because the legal owner changes from one group company to another. In broad terms, if the seller and buyer are both in the same qualifying group at the effective date of the transaction, relief may be available.

But the relief is not automatic in every intra-group transfer. The legislation looks carefully at whether the companies really are in the same group and whether there are arrangements in place that mean the property is, in substance, being moved out of the group or being used as part of a wider tax-driven plan.

What the official source says

Revenue Scotland’s guidance says that schedule 10 to the Land and Buildings Transaction Tax (Scotland) Act 2013 provides relief where, at the effective date of the transaction, both the seller and the buyer are companies in the same group.

For this purpose, a “company” means a body corporate.

Two companies are members of the same group if:

• one is a 75% subsidiary of the other, or
• both are 75% subsidiaries of a third company.

A company is a 75% subsidiary only if all three tests are met:

• the parent is the beneficial owner of at least 75% of the ordinary share capital,
• the parent is beneficially entitled to at least 75% of the profits available for distribution to equity holders, and
• the parent would be beneficially entitled to at least 75% of the assets available for distribution to equity holders on a winding-up.

The legislation applies detailed Corporation Tax Act rules to the profits and assets tests. “Ordinary share capital” broadly means all issued share capital except shares carrying only a fixed dividend and no other right to share in profits. “Control” is interpreted using the Corporation Tax Act 2010 rules.

The guidance also says group relief is not available in three main situations:

• where arrangements exist under which someone has, or could obtain, control of the buyer but not the seller,
• where a purpose of the transaction is connected with arrangements under which the consideration is provided or received, directly or indirectly, by a person outside the group,
• where a purpose of the transaction is connected with arrangements under which the buyer ceases, or could cease, to be in the same group as the seller by ceasing to be a 75% subsidiary.

There are limited exceptions, including certain cases involving stamp duty acquisition relief and certain demutualisation arrangements for insurance companies.

There is also a targeted anti-avoidance rule. Relief is not available if the transaction is not effected for bona fide commercial reasons, or if it forms part of arrangements whose main purpose, or one of the main purposes, is the avoidance of a tax liability.

The guidance further explains a special rule for share pledges and similar security arrangements. Broadly, security granted over shares in the buyer does not by itself block group relief if the statutory conditions are met and the lender has not exercised its rights. Those modifications are now treated as having effect from 1 April 2015.

What this means in practice

The starting point is simple: an intra-group land transfer can qualify for LBTT relief. But in practice, the real work is in checking the group relationship and then checking whether any wider arrangements disqualify the claim.

The first practical point is timing. The seller and buyer must be in the same qualifying group at the effective date. It is not enough that they were in the same group before, or are expected to be afterwards.

The second point is that share ownership alone is not enough. A company may appear to be a subsidiary in ordinary commercial language, but still fail the statutory 75% tests if rights to profits or assets on a winding-up are structured differently.

The third point is that the legislation is alert to transactions that are dressed up as intra-group transfers but are linked to outsiders. If there is a plan under which an external person funds the consideration, receives it, acquires control of the buyer, or the buyer leaves the group, the relief may be denied even though the seller and buyer are technically in the same group at the effective date.

This matters particularly in reorganisations, pre-sale transfers, financing transactions, and transactions involving lender security over shares.

How to analyse it

A sensible way to analyse a possible claim is to work through the following questions.

• Are both parties bodies corporate?
• At the effective date, are they in the same group under the statutory 75% tests?
• Does the parent satisfy all three limbs: ordinary share capital, distributable profits, and assets on a winding-up?
• Are there any arrangements under which someone could obtain control of the buyer but not the seller?
• Is any person outside the group directly or indirectly providing or receiving the consideration, or part of it, as part of linked arrangements?
• Is the transaction connected with arrangements under which the buyer leaves, or could leave, the group?
• Are any statutory exceptions potentially relevant, such as the share pledge modification or the specific stamp duty-related exceptions mentioned in the legislation?
• Was the transaction effected for bona fide commercial reasons?
• Does the wider arrangement have a main tax avoidance purpose, or one of the main purposes of avoiding tax?

Where lender security is involved, there is an extra question. Is the lender merely holding normal protective rights under a mortgage, pledge, or analogous arrangement, without having exercised those rights? If so, the special share pledge rule may preserve relief. But if the lender has wider rights than are needed to protect its position, or can influence the occurrence or timing of default, the exception may not apply.

Example

Illustration: Parent Ltd owns all of the shares in Subsidiary Ltd and is beneficially entitled to all of Subsidiary Ltd’s distributable profits and winding-up assets. Parent Ltd transfers a Scottish property to Subsidiary Ltd as part of an internal reorganisation. On the effective date, both companies are still within the same group and there is no plan for an outside buyer to acquire Subsidiary Ltd, no external person is funding or receiving the consideration, and the transfer is made for genuine commercial restructuring reasons. On those facts, group relief may be available.

Now change the facts slightly. Before the transfer completes, arrangements are already in place for an outside purchaser to acquire control of Subsidiary Ltd but not Parent Ltd. Even if the transfer is completed while the companies are still technically in the same group, the restriction on arrangements affecting control may deny relief.

A further variation is where a lender takes security over the shares in Subsidiary Ltd. That does not necessarily block relief if the arrangement falls within the statutory share pledge modification and the lender has not exercised its rights. The detailed terms of the security matter.

Why this can be difficult in practice

The difficult part is usually not the basic idea of group relief. It is identifying whether there are “arrangements” that bring one of the restrictions into play.

That word is broad. It can cover more than a signed sale agreement. It may include connected steps, understandings, funding structures, security packages, or planned changes in ownership. A transaction that looks like a straightforward intra-group transfer can fail if it is part of a wider sequence involving an external acquirer or external funding flows.

The 75% subsidiary test can also be more technical than it first appears. The legislation does not look only at voting power or headline share ownership. It also looks at economic rights to profits and assets. Different share classes, preference rights, or bespoke constitutional arrangements may affect the result.

The targeted anti-avoidance rule adds another layer. A commercially motivated reorganisation is not automatically protected if the overall arrangements also have a main tax avoidance purpose. Equally, the existence of a tax saving does not by itself prove that the rule applies. The legislation asks about purpose and commercial reality, which can be fact-sensitive.

Share pledge cases are another area where detail matters. The special rule was introduced because ordinary financing security could otherwise prevent relief. But the exception is not unlimited. It depends on the legal form of the arrangement, whether rights have been exercised, whether the lender has excessive rights, and whether the lender can influence the triggering of default or similar events.

The retrospective change is also important. The share pledge modification is now treated as having been in force from 1 April 2015, even though the original Order took effect later. For older transactions, that may affect whether relief was available.

Key takeaways

• LBTT group relief can remove tax on a land transfer between group companies, but only if the seller and buyer are in the same qualifying group at the effective date.
• The group test is technical: it looks at beneficial ownership of ordinary share capital, distributable profits, and winding-up assets, not just simple shareholding percentages.
• Relief can be blocked by linked arrangements involving changes of control, outsiders providing or receiving consideration, degrouping plans, or tax avoidance motives.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: LBTT Group Relief Guidance for Intra-Group Land Transactions Between Companies

View all LBTT Guidance Pages Here