Rules for Transferring Chargeable Interest Between Partnerships Under Para 23 Explained

SDLT on land transfers between partnerships

When land is transferred from one partnership to another, special SDLT rules may mean the transaction falls within both the rules for transfers to a partnership and the rules for transfers from a partnership. In that case, you do not apply both rules separately. Instead, you calculate the chargeable consideration under each route and use the higher figure. The same approach applies to any rent element.

• This rule applies only if the transfer is a chargeable interest moving from one partnership to another and both partnership charging rules are engaged.
• The usual direct application of paragraph 10 and paragraph 18 is switched off, and the higher of the two calculated amounts is used instead.
• If any of the consideration is rent, you must also compare the paragraph 11 and paragraph 19 results and take the higher amount for that part.
• The purpose of the rule is to avoid overlap and confusion, while preventing taxpayers from choosing the lower result.
• In practice, the main difficulty is deciding whether both sets of partnership rules apply and working through the underlying calculations correctly.

Scroll down for the full analysis.

SDLT when land is transferred from one partnership to another partnership

This page explains the special SDLT rule that applies when a chargeable interest is transferred from one partnership to another partnership, and the transaction falls within both the “to a partnership” and “from a partnership” partnership rules. The point of the rule is to stop both sets of partnership charging rules applying directly at the same time. Instead, the legislation requires a comparison and uses the higher result.

What this rule is about

SDLT has special rules for land transactions involving partnerships. Those rules do not simply follow the ordinary contract price. Instead, they use statutory calculations designed to reflect the relationship between the property and the partners.

A transfer from one partnership to another partnership can potentially engage two different sets of partnership rules at once:

• the rules for a transfer of a chargeable interest to a partnership, and
• the rules for a transfer of a chargeable interest from a partnership.

If both sets applied directly without modification, the result could be confused or duplicative. Paragraph 23 exists to deal with that overlap.

What the official source says

The HMRC manual says that paragraph 23 applies where:

• there is a transfer of a chargeable interest from a partnership to a partnership, and
• the transfer is both a transaction to which paragraph 10 applies and a transaction to which paragraph 18 applies.

Where that happens, the direct application of paragraph 10 and paragraph 18 is switched off. Instead, the chargeable consideration is taken to be the higher of the amount produced by the paragraph 10 calculation and the amount produced by the paragraph 18 calculation.

The same approach applies where all or part of the consideration is rent. In that situation, the direct application of paragraph 11 and paragraph 19 is also switched off, and the chargeable consideration is taken to be the higher of the paragraph 11 amount and the paragraph 19 amount.

What this means in practice

The practical effect is that you do not charge SDLT twice under both partnership regimes. But you also do not choose whichever rule gives the lower answer. You must work out the result under each relevant rule and then use the higher amount as the chargeable consideration.

This matters because partnership SDLT rules are often driven by the identity of the partners and their interests, rather than just by the headline price stated in the transfer documents. A transaction between partnerships may therefore need two separate statutory calculations before you can identify the SDLT base.

In broad terms, paragraph 23 is a priority rule. It tells you what to do when the transaction sits in the overlap between two partnership charging provisions.

How to analyse it

A sensible way to approach the issue is:

• First, confirm that there is a transfer of a chargeable interest.
• Check that the transfer is from a partnership to a partnership.
• Ask whether the transaction falls within the rule for transfers to a partnership under paragraph 10.
• Ask whether the same transaction also falls within the rule for transfers from a partnership under paragraph 18.
• If both apply, do not apply paragraph 10 and paragraph 18 directly. Instead, calculate the chargeable consideration under each and take the higher amount.
• If the consideration includes rent, repeat the same exercise using paragraph 11 and paragraph 19, and again take the higher amount.

The key question is not simply whether land moved between partnerships. The real question is whether the transaction falls within both statutory charging mechanisms. If it does, paragraph 23 changes the way the chargeable consideration is determined.

Example

Illustration: a property is transferred from Partnership A to Partnership B. Because of the make-up of the partnerships and the nature of the transfer, the transaction falls within both the SDLT rule for transfers to a partnership and the SDLT rule for transfers from a partnership.

In that case, you do not apply both rules independently as if each produced its own separate charge. Instead, you calculate the chargeable consideration under the paragraph 10 route and under the paragraph 18 route, then use whichever figure is higher. If the transaction also involves rent, you do the same comparison between the paragraph 11 and paragraph 19 results for the rent element.

The example is deliberately general because the source material does not set out the detailed computational steps for paragraphs 10, 11, 18 or 19. Those steps would need to be taken from the underlying legislation and the relevant guidance on those provisions.

Why this can be difficult in practice

The source material states the priority rule, but not the detailed mechanics of the underlying calculations. In practice, the difficulty is often not the existence of paragraph 23 itself, but deciding:

• whether the transaction truly falls within both paragraph 10 and paragraph 18,
• how the partnership interests should be analysed for each calculation, and
• how to deal with transactions where the consideration includes both non-rent elements and rent.

Another practical difficulty is that readers may assume a transfer from one partnership to another is a single obvious category. For SDLT purposes, that is not enough. The legislation requires a more technical analysis of how the transaction fits within the specific partnership provisions.

A further possible misunderstanding is to think paragraph 23 produces a blended or averaged result. It does not. On the HMRC manual’s description, it requires a comparison and the use of the higher figure.

Key takeaways

• Paragraph 23 applies where a transfer of a chargeable interest from one partnership to another falls within both the “to a partnership” and “from a partnership” SDLT rules.
• When it applies, you do not apply both charging rules directly; you calculate under each route and use the higher amount as the chargeable consideration.
• If rent is involved, the same higher-of-two approach applies to the rent provisions as well.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Rules for Transferring Chargeable Interest Between Partnerships Under Para 23 Explained

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