LTT sale and leaseback: why group companies may not get relief
In short
In the WRA example, two companies under the same parent cannot use sale and leaseback relief. LTT must be considered separately for the lease assignment and the new lease.
- Same-group companies are connected.
- Market value can determine the LTT figure.
- Group relief may still be relevant.
Scroll down for the full analysis.
Read the original guidance here:
LTT sale and leaseback: why group companies may not get relief
LTT sale and leaseback: why group companies may not get relief
Land Transaction Tax (LTT) can apply twice when companies sell a lease and grant one back. If you searched for stamp duty, this Welsh example explains why membership of the same company group can prevent sale and leaseback relief.
What this rule is about
A business can raise money through a sale and leaseback while remaining in the property: it sells its interest and takes a new lease from the buyer. It remains in occupation.
LTT relief can cover the leaseback. But that relief has conditions. One condition matters especially here: the two companies must not be in the same group.
That can be costly.
What the official source says
In the Welsh Revenue Authority example, D Ltd holds a commercial lease, assigns it to E Ltd for £1 million, and then takes a market-rent lease of the ground floor from E Ltd. Both steps matter.
- D Ltd and E Ltd are each 100% owned by C Ltd.
- They are therefore in the same group.
- Sale and leaseback relief is not available.
- The tax rules treat the head-lease assignment as its own transaction.
- The new ground-floor sub-lease is also taxed as its own transaction.
- The tax rules use the value of each interest, rather than just the stated deal price, to work out the amount paid for LTT.
For this purpose, the group-relief rules treat companies in the same group as connected. Consequently, the special relief for the leaseback cannot apply.
What this means in practice
Do not assume that a leaseback is free from LTT because it forms part of one funding deal. Instead, the sale and the new lease can each create a separate LTT question.
- Check who owns both companies on the relevant date.
- List every lease or other property interest that the companies transfer.
- Value the interest sold to the other company.
- Value the interest granted back to the original company.
- Do not use the £1 million price as the only figure without checking the market-value rule.
For both parts, the official source says companies may obtain group relief if they meet the conditions in Schedule 16, rather than simply because the companies are connected. It remains conditional.
How to analyse it
Start with the shape of the deal, then test the relief. Before reaching a conclusion, ask whether the two companies are in the same group when the leaseback takes effect, because that relationship is central to the relief. Timing matters.
- Is there a sale of a property interest?
- Does the buyer grant a lease back from that interest?
- Is the leaseback part of the deal for the sale?
- Are both parties companies at the relevant time?
- Are they in the same group under the group-relief rules?
- If so, have you considered group relief separately for each transaction?
Example
After D Ltd assigns its commercial head lease to E Ltd for £1 million, E Ltd grants D Ltd a new lease of the ground floor at market rent, and both companies are wholly owned by C Ltd. They are in the same group.
The leaseback relief fails because D Ltd and E Ltd are in the same group. Calculate LTT separately for the head-lease assignment and the new sub-lease, using the market value of each interest. The source gives no rate or lease value, so it does not show a tax total.
Why this can be difficult in practice
One commercial arrangement can contain two taxable steps for LTT. That distinction matters.
- A shared parent can make the companies part of the same group.
- Group relief has its own conditions and restrictions.
- The value of a lease can differ from the cash paid under the wider deal.
- The leaseback may cover only part of the original property.
- The result depends on the ownership structure at the relevant time.
Key takeaways
- Sale and leaseback relief does not apply between companies in the same group.
- Both the sale and leaseback can face LTT separately.
- Group relief may still be available, but it needs its own check.
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
- LTTA 2017 section 17 — when a land transaction is taxed
- LTTA 2017 section 22 — market value rule for connected companies
- LTTA 2017 section 74 — how connected persons are identified
- LTTA 2017 Schedule 9 para 1 — relief for the leaseback part
- LTTA 2017 Schedule 9 para 2 — meaning of a sale and leaseback
- LTTA 2017 Schedule 9 para 3 — conditions for sale and leaseback relief
- LTTA 2017 Schedule 16 para 2 — when group relief is available
- LTTA 2017 Schedule 16 para 3 — meaning of companies in the same group
- LTTA 2017 Schedule 16 para 4 — restrictions on group relief availability
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority 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. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The source does not state the transaction date, the value of the new sub-lease, or whether all group relief restrictions are met.
- The supplied statutory library did not include the requested currency notice, so the current status of the legislation should be checked before relying on this page for a later transaction.
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 group structure on the relevant transaction date.
- Documents for the head-lease assignment and new sub-lease.
- The £1 million sale agreement and evidence of the rent.
- A valuation of each interest transferred or granted.
- Details of any arrangements that could restrict group relief.
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 Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION LTT sale and leaseback: why group companies may not get relief [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 - LTTA 2017 section 17 - when a land transaction is taxed https://www.legislation.gov.uk/anaw/2017/1/section/17 - LTTA 2017 section 22 - market value rule for connected companies https://www.legislation.gov.uk/anaw/2017/1/section/22 - LTTA 2017 section 74 - how connected persons are identified https://www.legislation.gov.uk/anaw/2017/1/section/74 - LTTA 2017 Schedule 9 para 1 - relief for the leaseback part https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/1 - LTTA 2017 Schedule 9 para 2 - meaning of a sale and leaseback https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/2 - LTTA 2017 Schedule 9 para 3 - conditions for sale and leaseback relief https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/3 - LTTA 2017 Schedule 16 para 2 - when group relief is available https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/2 - LTTA 2017 Schedule 16 para 3 - meaning of companies in the same group https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/3 - LTTA 2017 Schedule 16 para 4 - restrictions on group relief availability https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/4 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/land-transaction-sale-and-leaseback-relief-technical-guidance HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority is its 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 - The source does not state the transaction date, the value of the new sub-lease, or whether all group relief restrictions are met. - The supplied statutory library did not include the requested currency notice, so the current status of the legislation should be checked before relying on this page for a later transaction. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 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 4 September 2026
Useful article? You may find it helpful to read the original guidance here: LTT sale and leaseback: why group companies may not get relief
Search Land Tax Advice with Google
