LTT sale and leaseback: a group company cannot take the lease
Sale and leaseback relief and group companies
A lease granted to a subsidiary rather than the company that sold the property does not meet the example’s relief conditions.
- The seller and tenant must be the same legal person.
- Group companies remain separate legal persons.
- Check current legislation for the market-value treatment.
Scroll down for the full analysis.
Read the original guidance here:
LTT sale and leaseback: a group company cannot take the lease
LTT sale and leaseback: a group company cannot take the lease
If a company sells a property and its subsidiary takes the lease back, sale and leaseback relief will not apply in this example. That can leave both steps within Land Transaction Tax (LTT). LTT replaced stamp duty land tax in Wales in 2018.
What this rule is about
A sale and leaseback often helps a business raise cash while continuing to use its premises. In this arrangement, the business sells the property and then rents it back from the buyer.
Relief requires the lease to return to the seller. A group structure does not change that basic point.
What the official source says
In the official example, H Ltd owns a commercial freehold, sells it to an unconnected company, Y Ltd, for £2 million, and Y Ltd agrees to grant a lease of the whole property at market rent. Those are the stated facts.
- H Ltd asks for the lease to go to its subsidiary, I Ltd.
- H Ltd and I Ltd are in the same group.
- They are still separate legal persons.
- I Ltd did not sell the property to Y Ltd.
- The lease therefore is not granted back to the seller, H Ltd.
- The official source says the relief conditions are not met.
What this means in practice
Guidance says that both the sale and the lease are subject to LTT and that, for each transaction, the amount used is the market value of the interest acquired. That is the guidance’s position.
That distinction can be costly. Although moving the lease to another company may look like an internal group choice, for this relief it changes who receives the lease. The recipient matters.
- Do not assume a parent and subsidiary count as one seller.
- Check the named tenant before the documents are signed.
- Consider the tax result for both the sale and the lease.
- Keep evidence of the agreed terms and any valuation.
How to analyse it
Start with the names on the documents, then ask whether the company receiving the lease is the same company that sold the property, rather than another member of its group. That match is essential.
- Identify the company selling the property.
- Identify the buyer.
- Identify the company named as tenant in the lease.
- Check whether the lease is granted out of the interest the buyer acquired.
- Check the other conditions for sale and leaseback relief.
- Work out the LTT position for each separate step.
Example
H Ltd sells its commercial property to Y Ltd for £2 million, but Y Ltd grants the lease to I Ltd, H Ltd’s subsidiary, rather than granting it to H Ltd. The official example says this fails because I Ltd, not H Ltd, receives the lease. Both transactions are then subject to LTT, using market value as stated in the guidance.
Why this can be difficult in practice
People often focus on who controls the companies. That is not enough here. Although the documents may show one commercial deal, each company has its own legal identity.
Care is also needed with the market-value conclusion in the official example, because the supplied statute confirms the core relief test but does not explain that conclusion. Check the legislation in force when the deal takes place.
- Group membership does not make two companies the same person.
- A lease to the wrong group company can prevent the relief.
- The signed sale and lease documents matter most.
- Current law must be checked before relying on a market-value result.
Key takeaways
- The seller must receive the lease back.
- A subsidiary is separate from its parent company.
- In this example, both steps fall within LTT.
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 subject to ltt
- LTTA 2017 Schedule 9 para 1 — relief for the leaseback part of an arrangement
- LTTA 2017 Schedule 9 para 2 — the statutory sale and leaseback arrangement definition
- LTTA 2017 Schedule 9 para 3 — conditions for sale and leaseback relief
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 bundled statutory text does not show the legal basis for the guidance’s statement that market value applies to both transactions. That point needs checking against legislation current on the transaction 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 sale agreement and lease documents
- The identity of the company that sold the property
- The identity of the company receiving the lease
- Evidence of the companies’ group relationship
- A valuation of each interest where market value is relevant
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: a group company cannot take the lease [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 subject to ltt https://www.legislation.gov.uk/anaw/2017/1/section/17 - LTTA 2017 Schedule 9 para 1 - relief for the leaseback part of an arrangement https://www.legislation.gov.uk/anaw/2017/1/schedule/9/paragraph/1 - LTTA 2017 Schedule 9 para 2 - the statutory sale and leaseback arrangement definition 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 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 bundled statutory text does not show the legal basis for the guidance's statement that market value applies to both transactions. That point needs checking against legislation current on the transaction date. 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: a group company cannot take the lease
Search Land Tax Advice with Google
