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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs: Group, reconstruction or acquisition relief

Purchaser ceases to be a member of the same group as the vendor within 3 years, property transferred to another group company

Purchaser ceases to be a member of the same group as the vendor within 3 years, property transferred to another group company

C Ltd is 100% owned by B Ltd. B Ltd is 100% owned by A Ltd. All three companies form a group for the purposes of Stamp Duty Land Tax.

A Ltd (the vendor) transfers the freehold interest in a parcel of land to B Ltd (the purchaser) for no consideration. This is the ‘relevant transaction’. The market value of the freehold interest is £1,000,000. B Ltd claims group relief in respect of the transfer.

B Ltd then transfers the freehold interest to C Ltd for £1,100,000 four months later. The market value of the freehold interest is £1,100,000 at this time. C Ltd could claim group relief in respect of the transfer but does not.

Stamp Duty Land Tax is paid on the land transaction.

A Ltd sells the shares in B Ltd to an unconnected third party within three years. The market value of the freehold interest is £1,750,000 at the time of the share sale. As a result of this sale of shares, B Ltd leaves the group (and C Ltd goes with it as it is a 100% subsidiary of B Ltd).

As the purchaser (B Ltd) left the same group as A Ltd (the vendor) before the end of the period of three years from the date of the relevant  group relief may be withdrawn.

However, the subject of the relevant transaction (the freehold interest) has been the subject of a subsequent acquisition at market value (by C Ltd) on which group relief was available but not  claimed. Stamp Duty Land Tax was paid on this transaction (at the time) and so there is no further Stamp Duty Land Tax to pay.