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Where Taxpayers and Advisers Meet

SDLT Group Relief Clarification - New leases

Joined:Thu Nov 25, 2021 4:43 pm
SDLT Group Relief Clarification - New leases

Postby JCP74 » Thu Nov 25, 2021 4:59 pm

I wonder if anyone can give a qualified answer to a query over Group Relief rules when issuing new lease.

In short, we have a small property Group, a holding company with two subsidiaries, one for development and another for longer term investments. It was set up in a group structure to enable us to move properties between companies without incurring SDLT where the ultimate ownership remained the same. We have a freehold property owned by our development business, but intend to grant leases for parts only of that property to the other subsidiary within the group at cost, so there is no gain / no loss.

Our interpretation is that Group relief would apply, but our solicitors are concerned about creating what may be seen as a new chargeable interest in the form of the leases. I have spoken with the HMRC helpline who suggested the following rule still applies, but wondered if anyone had direct experience?

"If the purchaser and vendor of a chargeable interest are companies and, at the effective date of the land transaction, they are both members of the same group, relief from stamp duty land tax may be claimed by the purchaser."



Joined:Sun Apr 30, 2017 5:45 pm

Re: SDLT Group Relief Clarification - New leases

Postby SDLT Geek » Sat Nov 27, 2021 2:59 pm

Yes, in principle group relief can apply to creating a new interest (a lease) as well as to transferring an existing interest. It is a matter of checking the conditions for group relief and being aware of the three year claw back.

One difference is the rule under FA03/Sch17A/para11 that a later assignment of the relieved lease, in cases were certain reliefs (such as group relief) are not available to the assignee, count as a grant of the lease for the rest of the term at the rest of the rents. That means the assignee ends up paying SDLT on the rent on the lease for which the group company had claimed relief.

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