Group Relief Application: A Ltd’s Ownership and Partnership Structure Explained

SDLT Group Relief and Companies Linked Through an LLP

SDLT group relief can reduce or remove SDLT on property transfers within a corporate group, but only where the strict legal group conditions are met. If the ownership link between companies runs through a limited liability partnership (LLP), that link may not count for SDLT group relief, even if the businesses are commercially part of the same wider group.

• For SDLT group relief, the test is based on a statutory company group, usually requiring one company to be a 75% subsidiary of another or both to be 75% subsidiaries of the same company.
• An LLP can interrupt that group relationship because it is not treated in the same way as a company for these SDLT grouping rules.
• In the example, A Ltd clearly forms a group with B Ltd and C Ltd, which it owns directly, but E Ltd and F Ltd may fall outside the SDLT group if their shares are held by an LLP.
• This means a land transfer involving E Ltd or F Ltd may not qualify for SDLT group relief, even though the companies appear to sit within the same wider business structure.
• When reviewing relief, focus on legal ownership of ordinary share capital and trace the ownership chain carefully through each entity involved.
• Do not rely on commercial control, accounting treatment, or indirect economic ownership, as these may not satisfy the SDLT statutory test.

Scroll down for the full analysis.

SDLT group relief where companies are connected through an LLP

This page looks at a narrow but important SDLT point: whether companies can count as being in the same group when the connection between them runs through a limited liability partnership (LLP). This matters because group relief can remove or reduce SDLT on transfers within a corporate group, but only if the statutory group conditions are met.

What this rule is about

Group relief is intended to prevent SDLT charges arising simply because property is moved around within the same corporate group. The difficulty is working out whether companies are actually members of the same group for SDLT purposes.

The source material gives a specific ownership structure:

• A Ltd owns all the shares in B Ltd and C Ltd.
• B Ltd and C Ltd each hold a 50% partnership interest in a partnership called “The Partnership”.
• The Partnership owns all the shares in E Ltd and F Ltd.

The point being addressed is what happens if “The Partnership” is an LLP rather than an ordinary partnership.

What the official source says

The HMRC manual page is under the heading of group relief and identifies this structure specifically where the intermediate entity is a limited liability partnership. Although the extract is brief, the legal issue is whether share ownership held by an LLP can establish the necessary group relationship for SDLT group relief.

For SDLT group relief, the legislation requires a company-based group relationship. In broad terms, one company must be a 75% subsidiary of another, or both must be 75% subsidiaries of a third company. The test depends on company ownership of ordinary share capital and related rights. An LLP is not a company for these purposes in the same way as a body corporate holding shares within a corporate group structure.

So where shares in E Ltd and F Ltd are held by an LLP, the group relationship needed for SDLT group relief may not be established between A Ltd, B Ltd, C Ltd and E Ltd or F Ltd merely because the LLP itself is owned by group companies.

What this means in practice

If land is transferred between companies, it is not enough to say that they are economically in the same group. The SDLT test is legal and technical. You must trace the required share ownership through entities that count for the statutory group test.

That means an LLP can disrupt what might otherwise look like a straightforward corporate group.

In the structure described:

• A Ltd clearly groups with B Ltd and C Ltd, because it owns 100% of each directly.
• The more difficult question is whether E Ltd and F Ltd are in the same SDLT group as A Ltd, B Ltd and C Ltd.
• If the shares in E Ltd and F Ltd are held by an LLP, that may prevent the statutory 75% group test from being satisfied.

The practical consequence is that a land transfer involving E Ltd or F Ltd may not qualify for SDLT group relief, even if the businesses are managed as part of one wider group.

How to analyse it

When looking at SDLT group relief in a structure involving partnerships or LLPs, ask these questions in order:

• Which companies are parties to the land transaction?
• Who legally owns the ordinary share capital in each relevant company?
• Is the ownership chain made up of companies that can satisfy the SDLT group test?
• Does the chain pass through an LLP or another entity that may not count in the same way as a company for group relief purposes?
• Can you show that one company is a 75% subsidiary of another company, or that both are 75% subsidiaries of the same company?

The key discipline is to focus on legal ownership and the statutory group definition, not on commercial control, accounting consolidation, or the fact that the same ultimate owners stand behind the structure.

Example

Illustration: A Ltd wants to transfer land to E Ltd without SDLT under group relief. A Ltd owns B Ltd and C Ltd directly. B Ltd and C Ltd are the members of an LLP, and that LLP owns all the shares in E Ltd.

At first glance, E Ltd may appear to sit within A Ltd’s wider group. But for SDLT group relief, the question is not whether A Ltd indirectly benefits from E Ltd. The question is whether the statutory company-group test is met. If the ownership link to E Ltd runs through the LLP, that may mean E Ltd is not in the same SDLT group as A Ltd for relief purposes.

Why this can be difficult in practice

This area is difficult because many business groups use LLPs as holding or operating vehicles, and commercially those entities may be treated as part of the same group. SDLT group relief does not necessarily follow that commercial reality.

The main source of difficulty is that readers often assume:

• an LLP is equivalent to a company for all tax grouping purposes, or
• indirect economic ownership is enough.

Those assumptions can be wrong for SDLT group relief. The relief depends on the statutory wording. If the ownership chain includes an LLP, the analysis becomes technical and may lead to a different answer from what the group expected.

The source extract is also brief, so it points to the issue rather than spelling out every consequence. In practice, the exact answer will depend on the detailed statutory group conditions and the precise legal ownership structure at the effective date of the transaction.

Key takeaways

• SDLT group relief depends on a strict statutory company-group test, not just overall commercial control.
• An LLP in the ownership chain can prevent companies from being treated as members of the same SDLT group.
• When checking group relief, trace the legal share ownership carefully and do not assume a wider corporate structure is enough.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Group Relief Application: A Ltd’s Ownership and Partnership Structure Explained

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