Partnership Incorporation: Property Transfer to Company Owned by Partners Explained

SDLT on transferring partnership property to a company owned by the partners

HMRC’s example says that where a partnership property business is moved into a company owned by the same individuals, the share purchase step is ignored for section 75A SDLT anti-avoidance purposes. Instead, the key SDLT event is the transfer of the properties from the partnership to the company, and the chargeable consideration is worked out under the special partnership rules in Schedule 15.

• Buying shares in an off-the-shelf company is a share transaction, so HMRC says it is ignored under section 75C(1) when considering section 75A.
• The main SDLT issue is the land transfer from the existing partnership to the company.
• HMRC says this type of transfer is dealt with under the partnership rules in Schedule 15, not the general anti-avoidance rule in section 75A.
• This means SDLT is not automatically based on market value or on the overall incorporation structure.
• The correct approach is to identify each legal step separately and then apply the specific SDLT code that governs the land transfer.
• The example is fact-specific, so different ownership splits or extra steps could lead to a different SDLT analysis.

Scroll down for the full analysis.

When a partnership transfers property to a company it owns: why HMRC says section 75A does not apply in this example

This page explains an HMRC example about a partnership property business being incorporated into a company. The main point is that HMRC says the general SDLT anti-avoidance rule in section 75A does not apply to the share purchase step in this fact pattern. Instead, the transfer of the properties to the company is dealt with under the special SDLT rules for partnerships in Schedule 15. This matters because the route by which the business is incorporated affects how SDLT is worked out.

What this rule is about

The example concerns a common commercial step: individuals carry on a property business in partnership, then later move that business into a limited company. In practice, that often involves two steps:

• the partners acquire the shares in a company, often an off-the-shelf company, and
• the partnership transfers its properties to that company.

The legal question is whether the broad anti-avoidance rule in section 75A FA 2003 should treat those steps as part of a wider land transaction arrangement and impose SDLT on a different basis, or whether the transaction should instead be analysed under the specific partnership code in Schedule 15.

HMRC’s example says that, on these facts, section 75A does not apply.

What the official source says

HMRC’s example involves three individuals, Nina, Ophelia and Penny, who have run a property letting business through a partnership for many years. They want to continue the business but reduce risk, so they incorporate it. They buy the shares in an off-the-shelf company and the partnership properties are then transferred to that company.

HMRC says section 75A does not apply. The reason given is that the first transaction is a transaction in shares. Under section 75C(1), that share transaction is ignored for the purposes of section 75A. Once that share step is left out of account, what remains is a transfer of property from an existing partnership to a company owned by the same individuals. HMRC says that transaction is not dealt with under section 75A. Instead, the SDLT chargeable consideration is worked out under the special partnership provisions in Schedule 15.

What this means in practice

The practical message is that not every multi-step incorporation of a property business falls into section 75A.

In HMRC’s example, the acquisition of the company itself is a share transaction, not a land transaction. HMRC points to section 75C(1) to say that this step is ignored when testing whether section 75A applies. That is important because it stops the mere use of an off-the-shelf company from automatically turning the arrangement into a section 75A case.

Instead, the SDLT analysis focuses on the actual land transfer: the movement of the properties from the partnership to the company. For that transfer, HMRC says the special partnership rules in Schedule 15 are the relevant code.

That matters because Schedule 15 contains its own method for calculating chargeable consideration in partnership cases. So the SDLT outcome is not determined simply by asking what the market value of the properties is, or by looking only at the company incorporation steps in the abstract. The partnership rules may alter the amount treated as chargeable consideration.

How to analyse it

Where a partnership property business is being transferred to a company, a sensible way to analyse the SDLT position is:

• Identify each legal step separately. Was there a share acquisition, a land transfer, or both?
• Ask whether any step is merely a transaction in shares. If so, HMRC’s example indicates that this step may be ignored for section 75A purposes under section 75C(1).
• Then identify the land transaction that actually gives rise to SDLT. In this example, that is the transfer of the partnership properties to the company.
• Ask whether the transfer is one to which the special partnership rules apply. HMRC’s answer here is yes.
• Calculate chargeable consideration under Schedule 15, rather than assuming section 75A overrides the analysis.

The key analytical point is that the existence of several connected steps does not by itself make section 75A the governing rule. You still need to ask whether one of the steps is excluded from the section 75A analysis and whether there is a more specific statutory code that applies to the land transfer.

Example

Illustration: A, B and C have long carried on a property rental business in partnership. They decide to operate through a company for liability reasons. They buy the shares in a newly formed company. The partnership then transfers its rental properties to that company, and A, B and C remain the ultimate owners through their shareholdings.

On HMRC’s example, the share purchase is ignored for section 75A purposes. The important SDLT event is the transfer of the properties from the partnership to the company. The SDLT charge is then worked out under the partnership rules in Schedule 15, not by applying section 75A to the overall incorporation structure.

Why this can be difficult in practice

This area can be difficult because there are several moving parts:

• section 75A is a broad anti-avoidance provision and can appear to apply whenever there are multiple linked steps;
• share transactions are usually outside SDLT, but they may still form part of the factual background;
• partnership transactions have their own specialist SDLT rules, which can displace simpler ways of thinking about consideration.

The HMRC example is also fact-specific. It deals with an established partnership transferring property to a company owned by the same individuals after they acquire the shares in that company. It should not be read as meaning that section 75A can never be relevant where a partnership business is incorporated. Different facts, different ownership proportions, or additional steps could change the analysis.

Another practical difficulty is that HMRC’s example is brief. It states the conclusion, but does not set out the full Schedule 15 computation. So the example is useful for the priority of the rules, but not as a complete guide to how the SDLT amount will be calculated in every incorporation case.

Key takeaways

• HMRC’s example says a share purchase used to acquire an off-the-shelf company is ignored for section 75A purposes under section 75C(1).
• In this fact pattern, the relevant SDLT analysis is the transfer of land from the partnership to the company.
• HMRC says that transfer is governed by the special partnership rules in Schedule 15, not by section 75A.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Partnership Incorporation: Property Transfer to Company Owned by Partners Explained

View all HMRC SDLT Guidance Pages Here