Stamp duty when you transfer a lease to a partnership
In short
HMRC’s example shows how stamp duty is worked out when a non-residential lease moves into a partnership.
- Only the part treated as moving to other partners is tested.
- Premium and rent are calculated separately.
- The example produces no stamp duty.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you transfer a lease to a partnership
Moving a lease into a partnership can trigger stamp duty, even when the former owner remains a partner. Where a lease moves into a partnership, stamp duty focuses on the portion that has effectively passed to the other partners, even if the former owner remains a partner. That portion matters.
What this rule is about
This page concerns a non-residential lease. A lease grant counts as a transfer for these partnership rules. To apply the rule, ask how much of the lease the original owner continues to hold through their partnership share after the grant has taken effect. That is the test.
What the official source says
In HMRC’s manual, an example involves A granting a lease to a partnership. A was the sole owner beforehand, but has a 40% income-profit share afterwards. HMRC calculates tax on the remaining 60%.
- A grants a non-residential lease to a partnership.
- There are two other partners.
- A is not connected with either of them.
- A has a 40% share of the partnership’s income profits.
What this means in practice
Rather than simply using the cash paid on the grant, the calculation begins with market value and then allows for the share the original owner retains through the partnership. Cash alone is not decisive.
- Here, A’s retained share is 40%.
- The part treated as moving away is 60%.
- The premium and the rent are tested separately.
How to analyse it
Start with the ownership before and after the transfer. Then work out the sum of lower proportions, often called SLP. This is the figure used to find the part that has moved.
- Identify the owner or owners immediately before the transfer.
- Check who is a partner immediately afterwards.
- Check whether any relevant people are connected.
- Work out the SLP and subtract it from 100%.
Example
In HMRC’s example, the lease premium has a market value of £250,000. A’s SLP is 40%, so the premium figure is £250,000 × 60% = £150,000. That falls within the £150,000 non-residential zero-rate band used in the example.
For the rent, the net present value, or NPV, is £100,000. Its relevant share is £100,000 × 60% = £60,000. That is also below the £150,000 rent band. HMRC’s result is therefore nil stamp duty.
Why this can be difficult in practice
The arithmetic is fairly short. Getting the facts right is hard. Changes in ownership shares, connections between partners, or market value can produce a different answer.
- A profit share may not tell the full ownership story without checking the agreement.
- Connected people can affect the SLP calculation.
- The premium needs a supportable market value.
- Rent must be converted into an NPV before the rent calculation.
Key takeaways
- A lease grant to a partnership can be a stamp duty transaction.
- The retained partnership share reduces the part treated as transferred.
- In HMRC’s stated example, both tax calculations produce nil.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 Schedule 15 para 9 — special partnership rules covering land transfers and lease grants
- FA 2003 Schedule 15 para 10 — value used when land moves into a partnership
- FA 2003 Schedule 15 para 11 — special rent calculation for partnership lease transfers
- FA 2003 Schedule 15 para 12 — working out the sum of lower proportions
- FA 2003 Schedule 5 para 2 — stamp duty bands for rent under a lease
- FA 2003 section 55 — stamp duty bands for non-residential property payments
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The result can change if the people involved are connected, or if their shares in the partnership differ from the stated facts.
- The example assumes that the £250,000 premium is the market value.
- The source does not give the lease term or the rent schedule used to reach the £100,000 net present value.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The lease and any document granting it to the partnership.
- The partnership agreement and evidence of each partner’s profit share.
- Evidence of who owned the lease immediately before the transfer.
- A supportable market valuation for any premium.
- The rent schedule and net present value calculation.
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty when you transfer a lease to a partnership [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 Schedule 15 para 9 - special partnership rules covering land transfers and lease grants https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/9/2025-11-17 - FA 2003 Schedule 15 para 10 - value used when land moves into a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/10/2025-11-17 - FA 2003 Schedule 15 para 11 - special rent calculation for partnership lease transfers https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/11/2025-11-17 - FA 2003 Schedule 15 para 12 - working out the sum of lower proportions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 5 para 2 - stamp duty bands for rent under a lease https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 section 55 - stamp duty bands for non-residential property payments https://www.legislation.gov.uk/ukpga/2003/14/section/55/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33590 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The result can change if the people involved are connected, or if their shares in the partnership differ from the stated facts. - The example assumes that the £250,000 premium is the market value. - The source does not give the lease term or the rent schedule used to reach the £100,000 net present value. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when you transfer a lease to a partnership
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