Moving a property between companies can change more than its legal owner. A Budget amendment to Stamp Duty Land Tax group relief makes the sequence of a corporate restructuring particularly important, including what happens after the transfer and how the resulting business will be financed.
The government’s Budget 2026 tax legislation overview, published on 28 October, announces a change effective from 29 October 2026. It targets the withdrawal of SDLT group relief where the purchasing company subsequently leaves the group after the selling company has been wound up. Legislation is to follow in Finance Bill 2026-27.
For property investors, developers and family property companies, Willow’s view is that the financing should be reviewed alongside the tax analysis. A restructuring can affect the borrower, available security and cash remaining after completion, even where the underlying buildings and rental income stay the same.
The change in focus
DLA Piper’s real estate analysis explains that winding up the vendor will no longer prevent the intended clawback when the purchaser leaves the group within the usual three-year period. Its commentary identifies relevant property transactions in England and Northern Ireland from 29 October 2026.
The announcement concerns a specific withdrawal issue. Group relief remains subject to its eligibility rules; a corporate transfer does not automatically create a tax charge.
What SDLT group relief does
As HMRC’s existing guidance explains, qualifying transfers of land and buildings between companies in the same group can benefit from SDLT relief. This allows property to move within a corporate group without SDLT being payable on that transfer where the conditions are met.
The definition of a group matters. HMRC’s definitions refer to a qualifying 75% subsidiary relationship, including ordinary share capital and entitlement to profits and assets. Two companies owned personally by the same individual do not qualify merely because their ultimate owner is the same.
Before financing discussions rely on a tax-free transfer, the accountant or solicitor should confirm that the actual ownership structure satisfies the relevant tests.
Why the sequence of events matters
Consider a simplified, hypothetical sequence. Company A transfers a property to Company B while both belong to a qualifying corporate group. Assume specialist advisers have confirmed that group relief is available at that point. Company A is subsequently wound up. Eighteen months after the property transfer, a later, unplanned sale of Company B is proposed.
The Budget amendment means the advisers should not assume that Company A’s disappearance prevents a withdrawal charge arising when Company B leaves the group. CMS specifically recommends revisiting reorganisations that relied on the vendor being wound up.
The initial assumption in this example is important. Existing restrictions can deny relief where relevant arrangements to change control or take the purchaser out of the group already exist at the time of the transfer. A planned onward sale therefore needs examination from the outset.
The precise outcome also depends on the applicable withdrawal conditions. HMRC’s existing withdrawal guidance addresses the property interest retained by the purchaser or a relevant associated company. The example illustrates an issue for advisers to investigate, rather than a calculation of liability.
Build a transaction timeline before committing
Record the proposed property transfer, any winding up, changes in share ownership, debt repayment and replacement borrowing on one timeline. Include steps already agreed or contemplated, as well as their intended completion dates.
The government’s stated commencement date should be checked against the detailed legislation and the transaction’s facts. An announcement that legislation will follow does not justify ignoring its announced effective date.
Nor should the usual three-year period be treated as a universal safe harbour. HMRC’s existing overview also refers to departures connected with arrangements made within that period. Timing and the substance of the arrangements both need professional review.
Establish what happens to the existing mortgage
Willow would begin the financing review with the current facilities. Identify each borrower, the property securing each loan and any guarantees or security given by other group members. A property schedule alone will not show the full debt position.
The solicitor should review the finance documents for restrictions affecting property disposals, changes of ownership and corporate reorganisations. Establish which consents are needed and whether the lender will require repayment, amended documentation or a new application.
If a replacement facility is required, request a current redemption statement and check its validity date. Include any early repayment charge, accrued interest, exit fee and legal discharge costs. A loan balance copied from management accounts may differ from the amount required to clear the debt on completion.
The Budget announcement does not itself change mortgage underwriting. The practical question is whether the existing and proposed lenders will support the structure the client’s advisers have designed.
Calculate the cash remaining after refinancing
A headline loan amount is only the starting point. The group needs to know how much usable cash remains after repayment of existing borrowing, transaction costs and any tax amount its advisers identify.
The following example is deliberately hypothetical. The £100,000 reserve is an assumed planning figure, not an SDLT calculation or a statement that tax is due. The loan amount is also illustrative and does not represent available terms.
| Item | Amount |
|---|---|
| Gross new borrowing | £1,800,000 |
| Existing debt redemption | £1,350,000 |
| Assumed transaction and finance costs | £50,000 |
| Cash before the illustrative reserve | £400,000 |
| Illustrative tax reserve | £100,000 |
| Remaining cash | £300,000 |
If the group had committed the full £400,000 to another purchase or development phase, the reserve would leave a £100,000 shortfall. The solution needs to be established before completion, whether through additional equity, a revised timetable or another viable financing arrangement.
Distinguish a reserve for a possible future liability from a tax payment actually due. Your advisers should confirm the amount, timing and responsible entity. The cash-flow model should then show where the money sits and when it may be needed.
Check the security across the whole group
Moving one asset can affect borrowing secured against several properties. Ask the solicitor and existing lender to establish whether a release of that asset also affects guarantees, company debentures or other security supporting the facilities.
Where several lenders are involved, prepare a clear schedule of the security each holds and the releases or replacement documents required. Identify any consent that depends on another step completing first.
A proposed new lender also needs to understand the structure it will be financing. Explain the property-owning company, its shareholders, any intermediate holding companies and the entities providing guarantees. Present the proposed structure alongside the current one so the changes are visible.
In Willow’s view, agreeing these points early is more useful than obtaining an indicative rate for a structure that has not yet been settled.
Test the income and liabilities of the resulting borrower
A group’s overall rental income may look healthy while the company taking the new loan has a different financial position. Establish which rents it will receive, which expenses it will meet and which other debts or obligations will remain with it.
Review the tenancy schedule, lease terms, voids, maintenance commitments and intercompany balances. Ask the accountant to explain the projected balance sheet after the transfer, including any debt created between group companies.
Willow would use that information to test the proposal with relevant lenders. A valuation and a broad group profit figure do not establish the borrowing available to a particular company.
Three situations worth reviewing early
A property company being prepared for sale
Where a property transfer forms part of a proposed company sale, the tax advisers should examine the complete arrangement. The finance review should identify debt to be repaid at sale, any change-of-control requirements and the cash needed before sale proceeds arrive.
A developer separating completed investments from development assets
The commercial objective may be to place retained rental properties in a different company. Compare the proposed ownership with the existing development facility and its release requirements, then assess the borrowing and rental income available in the receiving company.
A family property group changing ownership
For a succession or ownership restructuring, clarify which people and companies will hold the shares and provide guarantees afterwards. The accountant, solicitor and finance adviser should work from the same proposed structure and timetable.
Prepare one information pack for the advisers
A coordinated pack reduces the risk of the tax team modelling one structure while lenders assess another. Willow would suggest assembling the following before seeking detailed finance terms:
| Information | Purpose |
|---|---|
| Current and proposed company charts | Identify ownership, borrowers and entities leaving or remaining in the group |
| Property and tenancy schedules | Connect each asset, valuation assumption and income stream to its owner |
| Facility and security documents | Establish consent, repayment and release requirements |
| Tax advice and transaction steps | Record the advisers’ conclusions, assumptions, dates and potential cash requirements |
| Completion cash-flow forecast | Show borrowing, equity, redemption amounts, costs and remaining liquidity |
Keep the pack updated if the proposed buyer, ownership percentages or sequence changes. An earlier lending indication should be revisited if it was based on materially different information.
Agree the finance before the structure becomes fixed
The useful point to involve a finance adviser is while the transaction can still be adjusted. Once documents are committed, discovering that the receiving company cannot obtain the expected loan can leave the group facing an avoidable funding gap.
Willow can assess potential borrowing routes, compare the cost of retaining or replacing existing debt and identify the information lenders need. The assessment should include fees, repayment terms, security and flexibility for the client’s next planned step.
Accountants and solicitors should retain responsibility for the SDLT conclusions and legal implementation. Willow’s role is to translate the agreed structure and cash requirements into a financing assessment, so the client can judge whether the proposed transaction remains workable.
Restructuring a property group?
Bring the proposed company structure, existing borrowing and your advisers’ cash requirements into the finance discussion before committing to the transfer.
Willow can assess borrowing options for complex property ownership and help coordinate the financing with your accountant and solicitor.
Explore complex property lendingFrequently asked questions
Does the Budget remove SDLT group relief?
No. The announced amendment addresses withdrawal where the purchasing company leaves the group after the vendor has been wound up. Eligibility for relief and any subsequent withdrawal still require a transaction-specific assessment.
When does the announced change take effect?
The government states that the change takes effect from 29 October 2026, with legislation to be introduced in Finance Bill 2026-27. Advisers should confirm the commencement provisions against the dates and steps of the transaction.
Does owning both companies personally establish a qualifying group?
Not by itself. The group relief rules require a qualifying corporate relationship, including tests concerning ordinary share capital and entitlement to profits and assets. Common individual ownership alone does not establish that relationship.
Can I transfer the property and keep the existing mortgage?
That depends on the finance documents and the lender’s agreement. Establish whether consent, repayment or replacement borrowing is required before committing to the transfer, and confirm how existing security will be dealt with.
Can Willow advise on the SDLT liability?
The SDLT analysis should be undertaken by your tax and legal advisers. Willow can assess borrowing options, lender requirements, repayment costs and the cash available after refinancing, using the tax figures and transaction structure supplied by those advisers.