Example of Land Transfer Between Partnerships and SDLT Calculation Steps

SDLT on Land Transferred Between Partnerships Where Both Partnership Rules Apply

When land is transferred from one partnership to another and some people are involved in both partnerships, SDLT may need to be worked out under two separate partnership rules. You must do both calculations and use the higher chargeable consideration. In HMRC’s example, both calculations give the same result, so SDLT is charged on 55% of the land’s market value.

• The transfer can be treated both as a transfer out of a partnership and as a transfer into a partnership, so more than one SDLT rule may apply at the same time.
• If both rules apply, paragraph 23 requires you to calculate the chargeable consideration under each rule and use whichever figure is higher.
• The calculation uses market value, then reduces it by adding together the lower proportions for any continuing participants with interests on both sides of the transfer.
• For each relevant person, compare their share in the land through the partnership with their partnership share on the other side, and use the lower figure.
• In HMRC’s example, A and B are the only relevant overlapping partners, the total lower proportions are 45%, and SDLT is therefore charged on £550,000 out of £1,000,000.
• These rules are technical, and the result depends on identifying the correct relevant owners, corresponding partners, percentages, and timing immediately before and after the transfer.

Scroll down for the full analysis.

SDLT on land transferred between partnerships: when both partnership rules apply

This page explains a specific SDLT partnership scenario: land is moved from one partnership to another, and some of the people involved are partners on both sides. In that situation, more than one partnership rule can apply at the same time. The practical effect is that you may need to carry out two separate statutory calculations and use the higher result.

What this rule is about

SDLT has special rules for transactions involving partnerships. These rules do not simply tax the transfer by reference to the price paid. Instead, they often use market value and then reduce the charge by reference to the continuing economic interests of the relevant partners.

The source material deals with a transfer of land from one partnership to another partnership. Because some individuals are connected to the land both before and after the transfer through their partnership interests, the legislation can treat the transaction in two ways at once:

• as a transfer from a partnership to a partner, or someone connected with a partner, and
• as a transfer to a partnership from a partner, or someone connected with a partner.

Where both rules apply, the legislation requires a comparison of the two calculations. The chargeable consideration is whichever calculation gives the higher amount.

What the official source says

The HMRC manual example says that paragraph 10 and paragraph 18 both apply to the same transaction. Paragraph 23 then governs the result. It says that where both paragraph 10 and paragraph 18 apply, the chargeable consideration is the amount produced by paragraph 10(2) or paragraph 18(2), if greater.

So the exercise is not to choose one rule and ignore the other. You must work through both.

In the example:

• Partnership 1 owns the land before the transfer.
• Partnership 2 receives the land.
• A, B, C and D are equal partners in Partnership 1.
• A, B and E are partners in Partnership 2 in the shares 20%, 60% and 20% respectively.
• The persons are unconnected, except where the rules treat the same person as relevant on both sides.

HMRC then applies paragraph 10 and paragraph 18 separately. In each case, the sum of the lower proportions is 45. That means the chargeable consideration is market value multiplied by 55%.

What this means in practice

The important point is that not all of the market value is automatically charged. The rules try to identify how much of the land has, in economic terms, stayed within the hands of continuing participants.

If a person had an interest in the transferring partnership and also has an interest in the receiving partnership, that overlap can reduce the SDLT charge. But the reduction is not simply based on their headline partnership percentages. The legislation requires a structured calculation using:

• the person’s share in the land through the partnership at the relevant time, and
• the person’s partnership share on the other side of the transaction.

For each corresponding partner, you take the lower of those two figures. Those lower proportions are added together. The SDLT charge is then based on market value reduced by that total.

In this example, the overlapping interests of A and B reduce the taxable amount to 55% of market value. The remaining 45% is effectively treated as still being held within the continuing economic ownership of those relevant participants.

How to analyse it

A sensible way to approach this kind of case is as follows.

1. Check whether both partnership rules may apply

Ask whether the transaction can be seen both:

• as leaving a partnership and going to a partner or connected person, and
• as entering a partnership from a partner or connected person.

If yes, paragraph 23 may require both calculations.

2. Identify the relevant owners for each calculation

Under paragraph 10, the manual looks at who was entitled to a proportion of the chargeable interest immediately before the transaction and was a partner immediately after it.

Under paragraph 18, the manual looks at who was entitled to a proportion of the chargeable interest immediately after the transaction and was a partner immediately before it.

In the example, A and B satisfy both tests. E does not, because E was not a relevant owner on the transferring side and is not connected to one.

3. Identify the corresponding partners

For each relevant owner, identify the corresponding partner or partners under the statutory test being applied. In the example, A corresponds to A and B corresponds to B. No one else is treated as a corresponding partner.

4. Work out the proportion of the chargeable interest attributable to each corresponding partner

This is done by reference to the person’s entitlement to the land through the partnership at the relevant time.

In the example:

• before the transfer, A and B each had a 25% interest in the land through Partnership 1, because Partnership 1 had four equal partners;
• after the transfer, A had a 20% interest and B had a 60% interest through Partnership 2.

5. Compare that figure with the person’s partnership share

For each corresponding partner, the legislation uses the lower of:

• the proportion of the chargeable interest attributable to the partner, and
• the partnership share attributable to the partner.

This is the “lower proportion”.

6. Add the lower proportions together

The total is the sum of lower proportions, often abbreviated to SLP in partnership SDLT calculations.

The chargeable consideration is then:

market value × (100 − SLP)%

7. If both paragraph 10 and paragraph 18 apply, compare the two results

You must carry out both calculations and use the greater chargeable consideration.

Example

This is the manual’s example expressed more plainly.

Partnership 1 owns land worth £1,000,000. Its partners are A, B, C and D equally, so A and B each have a 25% interest in the land through that partnership.

The land is transferred to Partnership 2. Partnership 2 is owned 20% by A, 60% by B and 20% by E.

Under paragraph 10:

• A’s two relevant figures are 25% and 20%, so the lower proportion is 20%.
• B’s two relevant figures are 25% and 60%, so the lower proportion is 25%.
• Total lower proportions = 45%.
• Chargeable consideration = £1,000,000 × 55% = £550,000.

Under paragraph 18:

• A’s two relevant figures are 20% and 25%, so the lower proportion is 20%.
• B’s two relevant figures are 60% and 25%, so the lower proportion is 25%.
• Total lower proportions = 45%.
• Chargeable consideration = £1,000,000 × 55% = £550,000.

Because both calculations produce the same result, SDLT is charged on £550,000, being 55% of market value.

Why this can be difficult in practice

These rules are mechanical, but identifying the right people and percentages can be difficult.

• The same transaction may fall within more than one partnership provision. If that is missed, the SDLT position may be wrong.
• The terms “relevant owner” and “corresponding partner” are technical. You cannot safely rely on everyday ownership language.
• The percentages used are not always the same as profit-sharing ratios. The legislation asks about entitlement to the chargeable interest and partnership shares at particular times.
• Timing matters. The source repeatedly distinguishes between positions immediately before and immediately after the transaction.
• Connected persons can matter, even though in this example the parties are said to be unconnected and E is excluded for that reason.

A common misunderstanding is to assume that if some of the same people are involved on both sides, SDLT is charged only on the “new” partner’s share. That is too simplistic. The legislation requires the paragraph 10 and paragraph 18 calculations to be worked through in full, and where both apply, the higher result governs.

Key takeaways

• A transfer of land from one partnership to another can trigger both paragraph 10 and paragraph 18 of the SDLT partnership rules.
• If both apply, paragraph 23 requires both calculations to be done and the higher chargeable consideration to be used.
• In the HMRC example, the sum of lower proportions is 45, so SDLT is charged on 55% of market value.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Example of Land Transfer Between Partnerships and SDLT Calculation Steps

View all HMRC SDLT Guidance Pages Here