Section 75C(8A) Excludes Special Provisions for Notional Land Transactions

SDLT anti-avoidance rules and partnerships

When HMRC applies the SDLT anti-avoidance rules in sections 75A and 75C of Finance Act 2003, it may create a notional land transaction to test the tax result. For that notional transaction, the usual special SDLT rules for partnerships in Part 3 of Schedule 15 are switched off. However, an interest in a property investment partnership can still count as a chargeable interest for section 75A, so partnership arrangements are not automatically outside the anti-avoidance rules.

• The special partnership SDLT rules normally apply to land moved into or out of a partnership, and to transfers of interests in a property investment partnership.
• If section 75A applies and a section 75C notional transaction has to be constructed, those special partnership rules must not be used for that notional transaction.
• This rule is set out in section 75C(8A), which expressly disapplies Part 3 of Schedule 15 for the notional transaction.
• You must keep separate the treatment of the actual transactions under normal partnership rules and the treatment of the notional transaction under the anti-avoidance rules.
• Even though the partnership code is ignored for the notional transaction, an interest in a property investment partnership may still be a chargeable interest for section 75A purposes.

Scroll down for the full analysis.

SDLT anti-avoidance and partnerships: why the special partnership rules are switched off for the Section 75C notional transaction

This page explains a technical but important SDLT point. Where HMRC is considering the anti-avoidance rules in section 75A and section 75C of Finance Act 2003, a “notional land transaction” may have to be constructed. For that notional transaction, the usual special SDLT rules for partnerships in Part 3 of Schedule 15 do not apply. That matters because partnership transactions often have their own valuation and charging rules, but those rules are deliberately ignored at this stage of the section 75A analysis.

What this rule is about

SDLT has special rules for dealings involving partnerships. Those rules can apply where land is transferred into a partnership, out of a partnership, or where there is a transfer of an interest in a property investment partnership. In ordinary SDLT analysis, those provisions can significantly affect whether tax is due and how much is charged.

Section 75A and related provisions are different. They are anti-avoidance rules aimed at cases where a series of transactions produces less SDLT than would have arisen on a direct land transfer. In that context, the legislation may require a hypothetical or “notional” land transaction to be identified and taxed instead.

The point covered by section 75C(8A) is narrow but important: when working out that notional transaction, you do not apply the special partnership rules in Part 3 of Schedule 15.

What the official source says

The HMRC manual says that, when considering the notional land transaction, none of the special provisions in Part 3 of Schedule 15 Finance Act 2003 apply. It says they are specifically excluded by section 75C(8A).

The manual identifies the types of transaction those special provisions would normally cover:

• the transfer of a chargeable interest to a partnership by a partner or a person connected with that partner
• the transfer of a chargeable interest from a partnership to a partner or a person connected with that partner
• the transfer of an interest in a property investment partnership

The manual also makes a separate point. Although Part 3 of Schedule 15 is disapplied for the notional transaction, an interest in a property investment partnership still counts as a chargeable interest for the purposes of section 75A.

What this means in practice

If a transaction or series of transactions involving a partnership is being tested under section 75A, you should not carry over the normal partnership charging rules into the notional transaction calculation.

In practical terms, this means two things.

First, the fact that the real-world steps involve a partnership does not mean the notional transaction is taxed under the partnership code. The legislation tells you to ignore those special rules at that stage.

Second, this does not mean partnership interests are irrelevant. The manual expressly reminds readers that an interest in a property investment partnership can still be a chargeable interest for section 75A purposes. So the partnership code is switched off for the notional transaction, but the subject matter may still fall within section 75A.

This is a common source of confusion. A reader might assume that because a transaction is one that would ordinarily be dealt with under Schedule 15, section 75A must stand back. That is not what this page says. The point is more precise: the special Schedule 15 Part 3 machinery does not apply when constructing and taxing the notional land transaction under section 75C.

How to analyse it

A sensible way to approach this issue is:

• Identify whether section 75A is potentially in play. Is there a scheme, arrangement, or series of transactions that may have reduced SDLT compared with a more direct transfer?
• Identify the land or chargeable interest involved. Do not assume that a partnership structure takes the matter outside section 75A.
• Ask whether the transaction involves one of the types normally covered by the partnership rules: transfers into a partnership, out of a partnership, or dealings in a property investment partnership.
• If you then need to consider the section 75C notional transaction, do not apply Part 3 of Schedule 15 to that notional transaction.
• Separately check whether the asset or right involved is still a chargeable interest for section 75A purposes. The manual specifically flags interests in property investment partnerships here.

The key analytical discipline is to keep the two stages separate. One question is whether the actual steps fall within the partnership rules in ordinary SDLT terms. A different question is how the notional transaction is treated once section 75A and section 75C are engaged.

Example

Illustration: suppose land is moved using a partnership structure in a way that would normally require the special partnership rules in Schedule 15 Part 3 to be considered. If HMRC then examines the arrangements under section 75A and concludes that a notional land transaction must be considered, the tax treatment of that notional transaction is not worked out using those special partnership rules. They are expressly disapplied for that purpose.

But if part of the arrangement involves an interest in a property investment partnership, that interest may still matter because it can be a chargeable interest for section 75A.

Why this can be difficult in practice

The difficulty is that partnership SDLT rules are already highly specialised, and section 75A adds a separate anti-avoidance framework on top. It is easy to mix up:

• the treatment of the actual legal transactions under the normal partnership code, and
• the treatment of the notional transaction constructed under section 75C

Another difficulty is that disapplying Part 3 of Schedule 15 does not mean every partnership-related feature disappears from the analysis. The manual specifically preserves the point that an interest in a property investment partnership can still be a chargeable interest for section 75A. So some partnership concepts remain relevant, but not in the same way.

This area is therefore fact-sensitive and sequence-sensitive. The order in which you ask the questions matters.

Key takeaways

• For the section 75C notional land transaction, the special partnership rules in Part 3 of Schedule 15 FA 2003 are expressly excluded.
• This exclusion covers the notional transaction even if the real-world steps involve transfers into or out of a partnership, or an interest in a property investment partnership.
• An interest in a property investment partnership can still be a chargeable interest for section 75A purposes, so partnership structures are not automatically outside the anti-avoidance rules.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Section 75C(8A) Excludes Special Provisions for Notional Land Transactions

View all HMRC SDLT Guidance Pages Here