Stamp Duty Land Tax Group Relief

Stamp Duty Land Tax (SDLT) group relief allows property to be transferred between group companies without the acquiring company suffering any SDLT liability.

In order to qualify for group relief both companies must be members of the same group. This means that:-

• Both must be 75% subsidiaries of the same company; or
• One must be a 75% subsidiary of the other.

As an example if X Limited was to qualify as a 75% subsidiary of Y Limited then this would mean:-

• Y Limited must be the beneficial owner of at least 75% of the ordinary share capital of X Limited; and
• Y Limited must be beneficially entitled to not less than 75% of any profits available for distribution to equity holders in X Limited; and
• Y Limited must be beneficially entitled to not less than 75% of any assets of X Limited available for distribution to its equity holders on a winding up.

There is in place anti-avoidance rules designed to prevent companies deliberately exploiting the group relief provision.

There are also SDLT clawback provisions which come into play if there is any change in the group structure within three years after a property is transferred. One example is if the acquiring company ceases to be a member of the same group as the transferring company as a result of the acquiring company leaving the group.

If clawback applies then the acquiring company simply becomes liable to pay the SDLT which would have been payable at the time of the original transfer.

For more information please email Corra Irwin or telephone 01463 239393.

Disclaimer:
The information in this publication is based on our current understanding of the Law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.