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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 on 25/06/04. This is the ‘relevant transaction’. The market value of the freehold interest is £1,000,000 on 25/06/04. B Ltd claims group relief in respect of the transfer.

B Ltd then transfers the freehold interest to C Ltd for £1,100,000 on 19/10/04. The market value of the freehold interest is £1,100,000 on 19/10/04. 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 on 07/07/06. The market value of the freehold interest is £1,750,000 on 07/07/06. As a result of this sale of shares, B Ltd leaves the group on 07/07/06 (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of three years from the date of the relevant transaction (which period would end on 24/06/07), group relief may be withdrawn.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). Stamp Duty Land Tax was paid on this transaction (at the time) and so there is no further Stamp Duty Land Tax to pay.