Advanced Taxation (UK) · Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Group Relief, Gains Groups and Stamp Taxes in ATX-UK

Updated 11 October 2026 · Fact-checked

Group relief lets a company surrender its current-period trading losses and other eligible amounts to a related company in a 75% group, so profits and losses are matched. A gains group lets members transfer assets at no gain no loss. SDLT group relief can exempt intra-group transfers, but it can be clawed back.

Understand Groups: Group Relief, Gains Groups and Stamp Taxes

UK corporation tax is charged on each company separately. Without relief, one company can pay tax while its sister company has an unused loss. Group rules fix this. They apply different tests for different reliefs, so learn each test separately.

Group relief for losses. Two companies are in a loss relief group if one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company. A 75% subsidiary means the parent owns at least 75% of the ordinary share capital. The parent must also be entitled to at least 75% of the profits available for distribution and at least 75% of the assets on a winding up. Indirect holdings are tracked through the chain. The loss company surrenders and the profit company claims. Trading losses can be surrendered, and so can other eligible amounts such as property business losses and non-trading loan relationship deficits. Relief is for the overlapping period only, and the amount claimed cannot exceed the claimant's taxable total profits. Group relief is available between UK-resident companies, and also between non-UK companies that trade in the UK through a permanent establishment (for the amounts relating to that establishment). The 75% parent itself can be non-UK, so check the residence of the surrendering company and the claimant, not just the parent.

Consortium relief. This is a related idea, and it is not a 75% group test. A company is a consortium company if at least 75% of its ordinary share capital is owned by companies, each holding at least 5%. Each such company is a member of the consortium. Where the consortium company surrenders its loss, a member can claim a share of it in proportion to its holding. The claim is limited to the lower of the member's share of the loss and the member's available profits. Where a member surrenders its loss to the consortium company, relief is limited to the lower of the member's loss and the consortium company's profits multiplied by the member's percentage holding. Relief can also work through a link company, which is a consortium member that is also a member of a group, so that other group companies can claim.

Chargeable gains groups. A gains group is a principal company and its 75% subsidiaries. The test uses ordinary share capital only. It does not need the profits and assets entitlements that the loss relief test needs. A subsidiary of a subsidiary is also in the gains group, but only if the principal company holds more than 50% of it effectively through the chain. Within a gains group, an asset transfer between members is treated as made at no gain no loss. The transfer is treated as made at the transferor's cost plus any indexation allowance up to December 2017. Indexation allowance for companies was frozen at December 2017, so an asset bought after that date has no indexation. The transferee takes over that value as its base cost. The gain is only taxed when the asset leaves the group. Members can also elect to transfer a gain or loss to another member, and they can join in a rollover relief claim as if they were a single company. This helps to use capital losses against gains.

Degrouping and stamp taxes. A degrouping charge can arise if a company leaves the group within six years of receiving an asset on a no gain no loss basis, and it still holds the asset when it leaves. The gain is calculated as if that company had sold the asset at its market value at the date of the intra-group transfer. It is not taxed as a separate gain on its own. Instead, it adjusts the sale proceeds of the shares in the company that leaves, in the computation of the vendor group company, so the vendor pays the tax. This means the substantial shareholding exemption may apply to the share sale, which can remove the degrouping gain as well. A joint election can instead reallocate the charge to another group company. Stamp duty land tax and stamp duty have their own group reliefs. Intra-group transfers of land or shares can be relieved if the 75% test is met. SDLT group relief is withdrawn if the transferee leaves the group within three years while still holding the property. Use the rates in the tax tables: SDLT on non-residential land is 0% to £150,000, 2% from £150,001 to £250,000 and 5% above that. Stamp duty on shares is 0.5%.

Key rules to remember

Loss relief group test: Parent holds ≥ 75% of ordinary share capital, ≥ 75% of profits available for distribution and ≥ 75% of assets on winding up; The same tests apply for sister companies through a common parent. Check indirect holdings carefully.
Group relief limit: Relief claimed ≤ lower of (surrendering company's available loss, claimant's taxable total profits) for the overlapping period; Time-apportion for non-matching accounting periods. Apportion both the loss and the profits.
Gains group test: Principal company holds ≥ 75% of ordinary share capital of subsidiary; indirect subsidiaries also need principal company's effective holding > 50%; Ordinary share capital only. No profits or assets entitlement test.
Transfer within a gains group: Transfer value = transferor's cost + indexation allowance up to December 2017 (if any) → no gain, no loss; The transferee takes the asset at that value and is taxed only on a sale outside the group. An asset bought after December 2017 has no indexation.
Stamp duty land tax (non-residential): 0% to £150,000; 2% on £150,001 to £250,000; 5% above £250,000; Marginal slices. Use only if no group relief applies.
Stamp duty on shares: 0.5% of consideration; Group relief can remove it for qualifying intra-group transfers.
Consortium relief: Consortium company's loss claimed by a member ≤ lower of (loss × member's percentage holding, member's available profits). Member's loss surrendered to the consortium company ≤ lower of (member's loss, consortium company's profits × member's percentage holding); Consortium company: at least 75% owned by companies, each holding at least 5%. Not a 75% group test. A link company can pass relief to its group.

How to solve Groups: Group Relief, Gains Groups and Stamp Taxes questions

Work through the relevant relief in a fixed order. State the test, then apply the numbers.

1Draw the group structure with percentages. Trace indirect holdings through each layer.
2Identify which relief is being asked about: losses, gains, SDLT or stamp duty. Remember that each has its own conditions.
3Test the 75% rules. State clearly whether ordinary share capital, profit entitlement and asset entitlement are all met where required.
4Match accounting periods. Time-apportion the loss and profits for the overlapping period.
5Compute taxable total profits before group relief for the claimant. Limit the claim to those profits.
6For gains, apply no gain no loss to the intra-group transfer. Consider elections or rollover relief to use losses.
7Check clawback and degrouping. Look for departures within three years (SDLT) or six years (gains).
8Finish with the tax effect. Compare rates and give a recommendation that saves most tax.

Quickest way: Group relief claim in four checks

When to use it: Use this when a question asks you to pick which company should claim a loss.

Confirm the group with the 75% test.
Calculate each claimant's profits for the overlapping period.
Rank companies by tax rate: surrender to the one with the higher marginal rate first.
Cap each claim at available profits and check what is left.

Common mistakes in Groups: Group Relief, Gains Groups and Stamp Taxes

Using the 50% or majority holding as the group test.
Students confuse group relief with other control tests.
Fix: Always write the 75% test in full and check ordinary share capital, profits and assets.
Forgetting to time-apportion when periods do not match.
Students take the full-year loss because the numbers look simple.
Fix: Work out the overlapping months first and apportion both loss and profits.
Claiming a loss above the claimant's profits.
Students focus on the loss and not the claimant's limit.
Fix: Compute taxable total profits before the claim and cap the relief.
Treating consortium relief as a 75% group claim.
The words group and consortium sound alike.
Fix: Apply the consortium percentage to the loss and the claimant's own profits.
Ignoring clawback after an SDLT or gains group transfer.
Students stop at the relief and do not read the later facts.
Fix: Scan the scenario for a later sale or leaving of the group and state the charge.

Worked examples

Example 1

A Ltd owns 80% of the ordinary share capital of B Ltd and has matching rights to profits and assets. Both have year-end 31 March 2026. A Ltd has a trading loss of £60,000. B Ltd has taxable total profits of £140,000 before group relief. Explain the group relief and the corporation tax saved for B Ltd using the rates in the tax tables. Assume no associated companies other than these two, and no exempt distributions, so augmented profits equal taxable total profits.

Show the solution

Check the group. A Ltd holds 80%, which is above 75%, and the entitlement to profits and assets match, so they are in a group.
Periods match, so the full loss is available.
Claim limit: lower of the loss £60,000 and B Ltd's profits £140,000 is £60,000.
B Ltd's taxable total profits after the claim are £140,000 − £60,000 = £80,000.
Associated companies: A Ltd and B Ltd are associated, so the limits are halved: lower limit £25,000 and upper limit £125,000.
Before relief, profits £140,000 exceed £125,000, so tax is at 25%: £35,000.
After relief, profits £80,000 lie between £25,000 and £125,000, so marginal relief applies. Augmented profits equal taxable total profits (no exempt distributions), so the profits fraction is £80,000 ÷ £80,000 = 1.
Tax at 25% is £20,000. Marginal relief = (£125,000 − £80,000) × 3/200 × (£80,000 ÷ £80,000) = £45,000 × 0.015 × 1 = £675.
Tax after relief is £20,000 − £675 = £19,325.
Saving is £35,000 − £19,325 = £15,675. Only B Ltd's tax is compared here, because B Ltd is the claimant.

Answer: A Ltd surrenders £60,000 to B Ltd. B Ltd's corporation tax falls from £35,000 to £19,325, a saving of £15,675, assuming no exempt distributions.

Example 2

X Ltd and Y Ltd are in the same 75% gains group. X Ltd acquired a factory after December 2017 for £200,000 and transfers it to Y Ltd. Its market value at the transfer date is £320,000. Two years later Y Ltd sells the factory outside the group for £350,000. Compute Y Ltd's chargeable gain. Then state what happens if, instead, Y Ltd were sold out of the group by the vendor company within six years of the transfer while still owning the factory.

Show the solution

Transfer from X to Y is treated as no gain no loss, so X Ltd has no gain.
X Ltd acquired the factory after December 2017, so there is no indexation allowance. The transfer value is the cost of £200,000.
Y Ltd takes over a base cost of £200,000.
On the sale for £350,000, the chargeable gain is £350,000 − £200,000 = £150,000.
For the alternative: a degrouping charge arises only if Y Ltd leaves the group within six years of the transfer while still holding the factory.
The gain is calculated as if Y Ltd had sold the factory at its market value at the date of the transfer: £320,000 − £200,000 = £120,000.
The gain is computed on Y Ltd, but it is added to the sale proceeds of the shares in Y Ltd by the vendor group company, so the vendor pays the tax.

Answer: Y Ltd's chargeable gain on an outside sale of the factory is £150,000. If Y Ltd left the group within six years of the transfer while still holding the factory, a £120,000 degrouping gain arises. It is added to the vendor's share sale proceeds.

Exam tips

Write the 75% test every time. Markers award marks for stating it clearly.
Check associated company status when you use the corporation tax limits. Halve the limits for each association.
Read the later facts in the scenario for clawback or leaving the group. Examiners often plant them.
Use professional skills marks: give a clear recommendation of which company should claim and why.
Use the tax tables for rates. Do not rely on memory for SDLT bands.

Practice questions from Corporation tax: the comprehensive calculation of the corporation tax liability, including overseas aspects

Groups: Group Relief, Gains Groups and Stamp Taxes in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Applied SkillsGroup Relief and Corporation Tax Groups

Groups: Group Relief, Gains Groups and Stamp Taxes: frequently asked questions

What is the 75% subsidiary test for group relief?

A company is a 75% subsidiary if its parent holds at least 75% of the ordinary share capital. The parent must also be entitled to at least 75% of profits available for distribution and 75% of assets on a winding up. Indirect holdings count.

What does no gain no loss mean in a gains group?

The transferor is treated as selling at its cost plus any indexation allowance up to December 2017, so no gain or loss arises. The transferee takes over that value and pays tax only when it sells outside the group.

When is SDLT group relief clawed back?

Relief is withdrawn if the transferee leaves the group within three years while still holding the property. The tax then becomes payable. Check the facts for such a departure.

How is consortium relief different from group relief?

Consortium relief applies to a company owned by a consortium: at least 75% owned by companies, each holding at least 5%. A member can claim its share of the loss, limited to the lower of that share and the claimant's available profits. It is not a 75% group claim.