Guide on Withdrawal of Group Relief for Land Transactions in the UK

When LTT Group Relief Is Withdrawn After an Intra-Group Property Transfer

LTT group relief can be withdrawn after a property transfer between group companies if the buyer leaves the seller’s group within three years of the transfer, or under arrangements made in that period. If that happens and the buyer or a relevant associated company still holds the original property interest, or one derived from it, LTT may become payable later as if the relief had never been claimed.

• The main risk is a later group change, such as a sale of the buyer’s shares, not just the original property transfer itself.
• Relief is usually withdrawn only if, when the buyer leaves the group, the buyer or a relevant associated company still holds the original chargeable interest or an interest derived from it.
• If relief is withdrawn, the tax is recalculated by reference to the original transaction using market value, and for leases this can include the rent as well.
• If only part of the original interest is still held, only a corresponding proportion of the original relief is clawed back.
• There are exceptions, including some reorganisations, winding up cases and situations where the seller leaves the group, but some exceptions only delay withdrawal if the buyer’s control later changes.
• The rules can be complex where there are derived interests, pre-planned arrangements, successive relieved transactions or disputes about control and market value.

Scroll down for the full analysis.

When LTT group relief is withdrawn after an intra-group land transfer

This page explains when Land Transaction Tax group relief can be clawed back after a property is transferred within a corporate group. The key point is that relief is not always permanent. If the buyer leaves the seller’s group within the relevant period, or as part of arrangements made within that period, the relief may be withdrawn and tax can become payable later.

What this rule is about

Group relief can remove or reduce LTT on certain land transactions between companies in the same group. But that relief is subject to anti-avoidance rules. Broadly, the legislation looks at what happens in the three years after the effective date of the relieved transaction.

The concern is that land might be moved around a group tax-free and then the company holding the land, or an interest derived from it, might be sold out of the group. If that happens in the circumstances described by the legislation, the earlier relief is withdrawn.

The rules are not limited to the exact property interest originally transferred. They can also apply where the buyer, or a relevant associated company, still holds an interest derived from the original one.

What the official source says

The source says group relief must be withdrawn if the buyer stops being in the same group as the seller:

• before the end of the three-year period beginning with the effective date of the original relieved transaction, or
• under arrangements made before the end of that three-year period.

Withdrawal only happens if, at the time the buyer leaves the group, the buyer or a relevant associated company still holds:

• the chargeable interest acquired under the relieved transaction, or
• a chargeable interest derived from it.

An example of a derived interest is given in the source: if the original transaction was the grant of a headlease, the reversion of a sublease granted out of that headlease can be a chargeable interest derived from the original interest.

The source also says relief is not withdrawn if the relevant interest has later been acquired at market value under a chargeable transaction where group relief was available but was not claimed.

If relief is withdrawn, the tax due is worked out by reference to the original transaction as if no group relief had been claimed. The chargeable consideration is taken to be the market value of the chargeable interest transferred by the original transaction and, for a lease granted at a rent, the rent as well.

If the interest still held at the withdrawal date is not the same as the interest originally transferred, only an appropriate proportion of the original relieved transaction is brought back into charge. That proportion is based on the market value, at the effective date of the original transaction, of the interest still held compared with the market value of the interest originally acquired.

The source also contains special rules for successive transactions. These can trace back through earlier relieved transactions, including transactions relieved by group relief, reconstruction relief or acquisition relief, where there is a change in control of the buyer and the statutory conditions are met.

There are also exceptions. Relief is not withdrawn in certain cases involving winding up, companies above the seller in the group structure ceasing to exist, qualifying reconstructions involving section 75 Finance Act 1986, and where the seller leaves the group. But some of these exceptions are only temporary protections. A later change in control of the buyer can still trigger withdrawal.

What this means in practice

The practical question is not just whether the buyer and seller were in the same group when the property was transferred. You also need to ask what happens afterwards.

If the buyer is sold out of the group within three years, and it still holds the property or a derived interest, the earlier relief may be clawed back. The tax is then calculated by looking back at the original transfer and asking what LTT would have been due if group relief had never been claimed.

This matters in corporate reorganisations, pre-sale planning, and post-acquisition integration. A transfer that looked tax-free at the time can produce a later LTT charge if the structure changes.

The rule can also catch indirect disposals. You may not sell the land itself. Instead, the shares in the buyer may be sold. If that causes the buyer to leave the seller’s group within the statutory period, withdrawal may follow.

The amount clawed back may be less than the full original relief if only part of the original interest, or an interest derived from part of it, remains in the buyer or a relevant associated company when the trigger event happens.

How to analyse it

A sensible way to analyse the issue is to work through these questions in order.

• Was there a land transaction for which LTT group relief was claimed?
• What was the effective date of that transaction? The three-year test runs from that date.
• Has the buyer ceased to be in the same group as the seller within that three-year period, or under arrangements made within that period?
• At the time the buyer leaves the group, does the buyer or a relevant associated company still hold the original chargeable interest or an interest derived from it?
• Has that interest since been acquired at market value under a chargeable transaction where group relief was available but not claimed? If so, the source indicates that withdrawal does not occur.
• If the interest still held is not identical to the original one, what proportion of the original market value does it represent, measured by reference to values at the effective date of the original transaction?
• Does one of the statutory exceptions apply, such as winding up, a qualifying section 75 Finance Act 1986 share acquisition, or the seller leaving the group?
• Even if an exception applies initially, has there later been a change in control of the buyer within the relevant period so that relief is still withdrawn?
• Are there successive relieved transactions that mean the legislation looks back to an earlier seller under the special tracing rule?

For change in control, the source says control is determined under sections 450 and 451 of the Corporation Tax Act 2010. It also says a company’s control changes if a controller ceases to control it, someone obtains control of it, or the company is wound up.

Example

Illustration: S Ltd transfers a property to fellow group company B Ltd and group relief is claimed. Two years later, the parent company sells all shares in B Ltd to an unconnected purchaser. At that point B Ltd leaves the seller’s group. If B Ltd still holds the property, or a derived interest, the original group relief is withdrawn and LTT becomes payable by reference to the original transfer as if relief had not been claimed.

Now vary the facts. Suppose S Ltd leaves the group first, but B Ltd remains where it is. The source says relief is not withdrawn merely because the seller leaves the group. However, if there is then a later change in control of B Ltd within the three-year period, that later event can still trigger withdrawal.

Why this can be difficult in practice

These rules are technical because the trigger is not simply a sale of land. It may be a share transaction, a restructuring, a winding up, or a chain of earlier relieved transfers.

Several points are especially fact-sensitive:

• Whether an interest is “derived from” the original chargeable interest. The source gives one example, but real structures can be more complicated.
• Whether a later event happened “in pursuance of, or in connection with, arrangements” made before the end of the three-year period. That can depend on the documentary and commercial background.
• How to identify the correct market value proportion where the original interest has been split, altered, or partly disposed of.
• Whether one of the exceptions genuinely applies, and if so whether it only prevents withdrawal temporarily.
• Whether the successive transaction rule causes the legislation to look back to an earlier relieved transfer and an earlier seller.

The source also distinguishes between the buyer leaving the group and the seller leaving the group. That difference matters. A seller leaving does not itself trigger withdrawal, but a later change in control of the buyer still can.

Key takeaways

• LTT group relief can be clawed back if the buyer leaves the seller’s group within three years, or under arrangements made within that period.
• The rule can apply where the buyer or a relevant associated company still holds not only the original property interest but also an interest derived from it.
• Some restructurings are protected, but those protections do not always end the matter if there is later a change in control of the buyer.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Withdrawal of Group Relief for Land Transactions in the UK

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