IR 47                         29 November 1994

                 STAMP DUTY: GROUP RELIEF

The  Chancellor proposes in his Budget to make two changes
to  the stamp duty relief for transfers between companies in the
same group. Under these measures,

- companies  within  a  group  will,  subject   to conditions,
be able to grant new leases to  each other free from stamp duty;

- the test for group membership for the purpose of the  relief
will be changed from  90  per  cent ownership of issued share
capital to 75 per cent ownership of ordinary share capital.

The  changes will apply to documents executed on or  after
the day on    which the Finance Bill receives Royal Assent.

The  Chancellor's intention is to extend stamp duty  group
relief to new leases, in line with representations; and to bring the
group control test for this relief closer to the test for
corporation tax purposes.

                          DETAILS

New Leases

1.    Sales  of land or shares by one company  to  another
company in  the  same group are exempt from  stamp  duty, subject
to      anti-avoidance   provisions   designed   to discourage
exploitation of the  relief.   Assignments  of existing leases are
similarly    exempt.  But grants  of  new leases  are  outside  the scope
of these  provisions.   A number  of  representations have
been received  for  the relief to be extended to grants of new
leases.

2.    Under  the  new rules, new leases will  qualify  for
group relief in the same way as sales and assignments  of existing
leases.  Agreements for  lease  will  similarly qualify  (provided
they are executed on or after the  date of Royal Assent).

Test for group membership

3.   Under the present rules, companies are associated for
the  purpose of the stamp duty group relief if either  one
company owns 90 per cent of the other, or both are 90  per cent  owned by a
third company.  Ownership is measured  by reference to issued
share capital.

4.   The new rules will be different in two respects.  The
requirement of 90 per cent ownership will be changed to 75
per cent ownership; and only ordinary shares will be taken into
account, instead of the whole of the  issued  share capital.

5.    These  changes will broadly align the group  control
test  for stamp duty with that for corporation tax.   More transfers
between   companies will be  exempt  from  stamp duty.   In a few
cases, the new rules will preclude relief where it would currently be
available.

                     NOTES FOR EDITORS

Exchequer cost

It  is estimated that the overall cost of these changes to
the stamp  duty group relief will be negligible.