If you restructure a company that holds real estate, you may owe transfer tax and tax on gains at each step. Most UK reliefs survive only if no company leaves the group for a set period afterward. Foreign rules apply as well when the property or the company is abroad.
Transfers of property within a group
Group relief lets you transfer UK land between companies in the same group free of Stamp Duty Land Tax (SDLT). Two companies count as a group if one holds at least 75% of the other. A third company that owns 75% of each also makes them a group.
You’ll lose the SDLT relief if arrangements exist for another person to control the buyer but not the seller. On capital gains, the transfer is tax-neutral. Under section 171 of the Taxation of Chargeable Gains Act 1992 (TCGA), the buyer takes the asset at the seller’s tax cost.
When the reliefs come back
Each relief turns into a charge if the receiving company leaves the group too soon. In each case, the period begins on the date of the transfer. Plan any later sale of the receiving company around those dates.
| Relief for a transfer within a UK group | What reverses it | Charge on reversal |
| SDLT group relief | The buyer leaves the group within three years while it still holds the land | SDLT on the market value of the land |
| No gain, no loss on the transfer | The receiving company leaves the group within six years while it still holds the asset | A deemed sale and reacquisition at market value. On a share sale, the gain is added to the share proceeds (since July 19, 2011), where the substantial shareholding exemption can relieve it |
You can liquidate the selling company after the transfer and keep the SDLT relief. The clawback doesn’t apply when the buyer leaves the group only because the seller is being wound up, under paragraph 4 of Schedule 7.
Selling the company instead of the property
A share sale usually costs your buyer far less in transfer tax than the SDLT on UK property due on a direct purchase. Your buyer’s saving depends on the property type and on where the company is registered.
| Transfer tax on a UK deal | Rate |
| Buying commercial property directly | SDLT at rates reaching 5% for the portion above £250,000 |
| A company buying a home for more than £500,000 | SDLT at a flat 17% |
| Buying shares in a UK company | Stamp duty of 0.5% |
| Buying shares in a non-UK company | Usually none, if the transfer is signed and kept abroad and the shares aren’t on a UK register |
A group company that sells the shares can claim the substantial shareholding exemption (SSE) on its gain. The seller needs a 10% stake held for 12 months within the previous six years. The company sold must also be trading. In HMRC’s view, a company that lets property probably isn’t.
HMRC treats non-trading activities above 20% as substantial, enough to fail the trading test. A separate test applies when pension schemes or other qualifying institutional investors own your group. At 80% or more, the gain is exempt with no trading condition. Between 25% and 80%, the exemption is partial.
Taking a home out of a company
You can take a dwelling out of your company and own it personally. In HMRC’s view, the transfer costs no SDLT if the company has no debt or owes money only to you. If you take over the company’s bank loan, SDLT applies to the debt you assume.
HMRC can still charge SDLT under its section 75A anti-avoidance rule if you repay the loan before the transfer. Where the shareholder is a company, the section 53 market value rule can apply. Section 54 lifts it for a distribution, unless group relief was claimed in the previous three years.
Your company still makes a disposal at market value for capital gains, even if no SDLT is due. You also dispose of an interest in your shares at the same time. You can compare this step with other options for structuring home ownership in the UK.
Winding up the company
In a members’ voluntary liquidation (MVL) of a solvent company, the directors declare that it can pay its debts within 12 months. They sign the declaration up to five weeks before the resolution and file it within 15 days. The company advertises the resolution in The Gazette within 14 days.
A liquidator can transfer the property to you instead of paying cash. HMRC treats that transfer as a capital distribution, so capital gains tax applies to it. If the liquidation ends within two years of an interim distribution, HMRC will accept a reasonable value for your remaining shares.
If you own 5% or more and continue a similar activity within two years, HMRC can tax the distribution as income. The anti-avoidance rule needs avoidance as a main purpose. It has applied since April 6, 2016, to UK resident close companies, broadly those controlled by five or fewer shareholders.
Striking off instead of liquidating
You can also strike the company off without a liquidator. Its distributions before striking off count as capital only if they total £25,000 or less. Above that limit, the whole amount is taxed as income. The limit also applies to companies incorporated outside the UK.
When the company leaves the UK
If your company stops being UK resident, it owes tax on a deemed market-value sale of its assets under section 185. The charge excludes assets of a UK permanent establishment, a taxable branch or office. Before it leaves, the company must notify HMRC and agree how it will pay.
HMRC doesn’t apply section 185 to UK land the company held on April 5, 2019 (CG73988). On land bought later, the exit gain is deferred until the company sells it. The company can instead elect, within two years, to have the gain arise at exit.
Cross-border reorganizations in the EU
You can merge or reorganize EU companies across borders without tax on the gains, under the Merger Directive. The assets must remain connected to a permanent establishment in the country they leave. A transfer of assets qualifies only if the business you transfer can operate on its own.
Directive 2019/2121 set common company law rules for these cross-border operations. Member states had to bring it into national law by January 31, 2023. Before the deal completes, the authorities have three months to review it. They must block a deal whose purpose is abusive or fraudulent.
Share deals in Germany and the Netherlands
If your company owns property in Germany or the Netherlands, a share sale can attract transfer tax as if the buyer bought the property. A UK holding company faces the same tests as a local one.
| Country of the property | When a share deal triggers real estate transfer tax | Other points for 2026 |
| Germany | 90% or more of a property company’s shares pass to new holders within 10 years, for deals after June 30, 2021 | A law of June 29, 2026 sets the order between the share rules. It adds a one-month notice duty for deals after July 2, 2026. Group relief needs a 95% holding for five years before and after the deal |
| Netherlands | A buyer and connected parties acquire at least a third of a company that holds mainly real estate, at least 30% of it in the Netherlands | The 2026 rate is 10.4% for non-residential property and 8% for dwellings that aren’t the buyer’s main home |
Property with a Russian link
Russia suspended parts of its tax treaties with 38 countries by Decree No. 585 of August 8, 2023. The decree reaches 24 EU member states. It also reaches the UK and the United States. In the UK treaty, Articles 5-21, 23 and 24 no longer apply.
Articles on real estate income and capital gains are among those suspended. Without treaty relief, Russia withholds 15% on dividends and 20% on interest that your company receives, DLA Piper reported in 2023. The Netherlands isn’t on the list, because its treaty with Russia ended on January 1, 2022.
FAQ
Can HMRC confirm in advance that a reconstruction isn’t tax avoidance?
Yes, if you apply for clearance under section 138 before the deal. HMRC must answer within 30 days of receiving your application. Since November 26, 2025, HMRC can also counter avoidance in share exchanges and reconstructions. It acts on a “just and reasonable” basis under the Finance Act 2026.
Can a property investment group claim SDLT acquisition relief?
Rarely, because the relief needs a trading undertaking. HMRC also doubts that splitting investments between companies is a reconstruction. You’ll lose acquisition relief or reconstruction relief if control of the acquiring company changes within three years.
How will rent be taxed once an individual holds the property?
From 2027-28, you’ll pay tax on property income at separate rates. The property basic rate will be 22%. The higher and additional rates will be 42% and 47%. If you’re taking property out of a company, compare those rates with the corporation tax the company pays now.