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HMRC internal manual

Stamp Duty Land Tax Manual

Reliefs: Group, reconstruction or acquisition relief

Reconstruction and acquisition relief: General overview FA03/SCH7/PART2

Reconstruction relief

This relief allows land and buildings to be transferred between two companies, as part of a transfer of an undertaking in exchange for shares, where there is no change of ownership, without any charge to Stamp Duty Land Tax (SDLT). For further guidance on undertakings see SDLTM23201 

An example is where a company decides to split an existing business, which is carried on by one company, into two.

Acquisition relief

This provides a relief which reduces the rate of tax from the relevant stamp duty land tax rate to a rate of 0.5%.

It applies where a property is transferred as part of the acquisition of an undertaking of another company in exchange for shares and no more than 10% cash.

Reconstruction and acquisition relief is withdrawn

  • if control of the acquiring company changes within three years of the transaction
  • if there are arrangements put in place within that period which result in a change of control after the period of three years

There are five exceptions to these withdrawal provisions. See SDLTM23240.

Where two of the exceptions apply, so relief is not withdrawn, and a subsequent non-exempt transfer occurs within the three year period, there are provisions which ensure that relief is then withdrawn. See SDLTM23250.

The following definitions are relevant

  • companies are associated if one has control of the other or both are controlled by another person or persons. Control is interpreted in accordance with ICTA88/S416
  • arrangements includes any scheme, agreement or understanding whether or not legally enforceable
  • relevant associated company for the purposes of withdrawal of reconstruction or acquisition relief, is a company

    • that is controlled by the acquiring company immediately before the control of that company changes
    • of which control changes in consequence of the change of control of the acquiring company
  • loan creditor has the meaning given by ICTA88/S417(7) to ICTA88/S417(9)