Real Estate & Corporate Property Tax: Structuring Property Holdings with Technical Discipline
Corporate property transactions are rarely tax-neutral. Whether acquiring investment property, transferring assets within a group, separating trading and property operations, or preparing for sale, the tax profile of real estate can materially affect value.
Stamp Duty Land Tax (SDLT), corporation tax on chargeable gains, VAT, capital allowances and group relief rules frequently interact in complex ways. Early structuring decisions often determine whether reliefs are preserved or exposure is crystallised.
At Jonathan Lea Network, we advise businesses, property-owning companies and corporate groups on structuring real estate transactions efficiently while maintaining technical defensibility.
SDLT: Structuring to Manage Exposure
SDLT is often the most immediate and visible tax cost in property transactions.
Key issues include:
- Commercial property rate application
- Multiple dwellings or mixed-use considerations
- Linked transaction rules
- Group relief availability
- Sub-sale and transfer of rights provisions
- Partnership and connected party transactions
Errors in structuring can trigger unintended SDLT liabilities or denial of relief. Careful sequencing and documentation are critical.
Corporation Tax on Chargeable Gains
When corporate entities dispose of property, gains are subject to corporation tax.
Planning considerations may include:
- Availability of group relief or no gain/no loss transfers
- Substantial shareholding exemption (where property is held via a subsidiary)
- Indexation history and base cost review
- Timing of disposal
- Interaction with losses
Pre-sale restructuring may improve tax efficiency, but must be approached cautiously to avoid anti-avoidance challenges.
VAT and Property Transactions
VAT treatment can significantly affect transaction viability and pricing.
Key areas of focus include:
- Option to tax elections
- Transfer of a going concern (TOGC) treatment
- Partial exemption exposure
- VAT grouping
- Capital Goods Scheme adjustments
Misalignment between contractual drafting and VAT treatment can lead to irrecoverable VAT costs.
We ensure property contracts reflect intended VAT outcomes and that procedural requirements are satisfied.
Capital Allowances and Embedded Fixtures
Commercial property transactions may include valuable capital allowances in respect of fixtures and integral features.
Considerations include:
- Fixed value requirements
- Section 198 elections
- Allocation of purchase price
- Timing and documentation
Failure to address capital allowances during the transaction can result in permanent loss of entitlement.
Property Within Corporate Groups
Many businesses hold trading operations and property within the same corporate structure.
Common restructuring objectives include:
- Ring-fencing property from trading risk
- Separating property prior to business sale
- Moving property between group entities
- Preparing for refinancing
However, intra-group transfers can trigger:
- SDLT exposure (subject to group relief conditions)
- De-grouping charges
- VAT implications
- Financing covenant issues
Sequencing and long-term planning are essential.
Real Estate in M&A Transactions
Property often plays a central role in corporate acquisitions and disposals.
Key tax considerations include:
- Whether to structure as share sale or asset sale
- SDLT exposure in asset acquisitions
- Latent gains within corporate wrappers
- Option to tax history
- Lease structures and rent concessions
Buyers will scrutinise property tax history during due diligence, including past elections, relief claims and compliance.
We integrate property tax analysis into transaction structuring and SPA/APA drafting.
Partnerships and Property Structures
Where property is held through partnerships or LLPs, additional complexity arises in relation to:
- SDLT partnership rules
- Connected party adjustments
- Incorporation planning
- Profit share realignment
These arrangements are highly technical and require careful modelling.
Anti-Avoidance and Relief Conditions
Property tax legislation contains detailed anti-avoidance provisions. Reliefs – including group relief and partnership-related relief – can be denied where arrangements are viewed as tax-motivated or fail technical conditions.
HMRC scrutiny in this area is active. Commercial rationale, evidential documentation and disciplined implementation are essential to support relief claims.
Legislative and case law developments can also affect the availability and interpretation of reliefs. Up-to-date technical advice is therefore critical, particularly in complex restructurings.
Our Approach
We provide:
- SDLT structuring advice
- Corporate property tax planning
- VAT analysis and contractual alignment
- Group restructuring support
- Capital allowances coordination
- Transactional tax integration in M&A
- Clearance and risk review where appropriate
Our advice is integrated with corporate, real estate and transactional documentation to ensure technical alignment.
Protecting Value in Corporate Property Transactions
Property assets often represent a significant proportion of corporate value. Tax inefficiency or structural error can materially erode returns. With early planning and technically rigorous execution, real estate transactions can be structured to preserve reliefs, manage exposure and support long-term commercial objectives. If you are acquiring, disposing of or restructuring corporate property holdings, disciplined tax analysis at the outset can materially affect the outcome.
Structuring Property Holdings with Certainty
Corporate real estate transactions involve layered interaction between SDLT, corporation tax, VAT and capital allowances regimes. Reliefs are available — but only where statutory conditions, group rules and procedural requirements are precisely satisfied.
Early structuring decisions frequently determine whether exposure is managed or inadvertently crystallised.
If you are acquiring, disposing of, refinancing or restructuring corporate property assets, engage our corporate property tax team at the outset.
Disciplined analysis and coordinated documentation can materially protect value and reduce downstream challenge risk.
Call us on 01444 708640 or email wewillhelp@jonathanlea.net to arrange a confidential discussion.
FAQ: Corporate Tax Structuring
SDLT group relief may be withdrawn if the transferee leaves the group within the relevant clawback period. This risk is particularly acute in pre-sale restructurings where a property-rich subsidiary is transferred intra-group shortly before disposal. Sequencing must be modelled carefully to avoid unintended SDLT crystallisation. Transfer of a going concern (TOGC) treatment can eliminate VAT on a property transfer, but only where strict conditions are satisfied — including correct option to tax status and continuity of letting activity. Technical defects in documentation or election history can result in unexpected VAT exposure. Yes. Intra-group transfers undertaken on a no gain/no loss basis can give rise to de-grouping charges if the entity leaves the group within the statutory period. Additionally, restructuring may impact future availability of the Substantial Shareholding Exemption where a property-holding subsidiary is involved. Failure to address fixtures and integral features at completion — including the use of section 198 elections and compliance with fixed value requirements — can permanently extinguish entitlement to allowances. These issues must be resolved contractually during the transaction process.
SDLT partnership rules apply complex deemed consideration formulae, particularly where connected parties are involved or profit shares are realigned. Incorporation of property-owning partnerships or internal restructuring can trigger SDLT in circumstances that appear commercially neutral.
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