Guide on Group Relief for LLP to B Ltd Property Transfer

SDLT Group Relief on Property Transfers from an LLP to a Group Company

When land is transferred from an LLP or partnership to a company in the same group, you must first calculate SDLT under the special partnership rules, not by using the normal sale price approach. Only after that can you consider whether group relief may reduce or remove the SDLT charge.

• The partnership rules look at the parties’ economic interests in the property before and after the transfer.
• In HMRC’s example, B Ltd receives the whole property but already had a 50% partnership share, so SDLT is charged on only 50% of market value.
• HMRC treats that 50% charge as reflecting B Ltd’s effective acquisition of C Ltd’s interest through the partnership structure.
• If B Ltd and C Ltd are in the same corporate group, Schedule 7 group relief may apply, provided all statutory conditions are met.
• The correct order is crucial: first apply the Schedule 15 partnership calculation, then test whether group relief is available on the resulting charge.
• These cases are often fact-sensitive, especially on partnership shares, market value, and whether the group relief conditions are satisfied at the relevant time.

Scroll down for the full analysis.

SDLT group relief on property transferred from an LLP to a group company

This page explains how group relief can apply when land is transferred out of a partnership or LLP to a company within the same corporate group. The source material deals with a technical SDLT calculation under the partnership rules and then asks whether group relief can reduce or eliminate the resulting charge. The key point is that you do not start with the normal sale price analysis. You first work out the SDLT charge under the partnership provisions, and only then consider whether group relief is available.

What this rule is about

Transfers of land involving partnerships and LLPs are subject to special SDLT rules. Those rules are designed to identify whether, in substance, land has moved between the partners and another person, rather than simply looking at the LLP or partnership as a separate seller.

Where the transferee is a company that was already a partner, the legislation can treat the transaction as partly reflecting that company’s existing economic interest in the property and partly reflecting an acquisition from the other partners. That matters because SDLT is then charged only on the part treated as moving from the other partners.

The source material then considers whether group relief can apply to that charge. Group relief is relevant where the transfer is, in substance, between companies in the same group.

What the official source says

The HMRC manual considers a transfer of a chargeable interest from an LLP to B Ltd. It says the partnership provisions apply, so SDLT must be worked out using the rules in Schedule 15, in particular the steps that identify the relevant owner, any corresponding partner, and the lower proportion used in the formula.

On the facts given:

• B Ltd is the relevant owner because it becomes entitled to the whole chargeable interest immediately after the transfer and was a partner immediately before it.
• B Ltd is also the corresponding partner.
• B Ltd is entitled to 100% of the property after the transfer.
• The lower proportion is the lower of:
  • the proportion of the chargeable interest attributable to B Ltd, and
  • the partnership share attributable to B Ltd.
• Those figures are 100% and 50%, so the lower proportion is 50%.

The manual then applies the Schedule 15 formula so that chargeable consideration is market value multiplied by 50%. In other words, SDLT is charged on 50% of the market value.

HMRC then explains the result in substance: by looking through the partnership, the transfer is effectively treated as a transfer from B Ltd and C Ltd to B Ltd. Economically, that means C Ltd’s 50% interest is moving to B Ltd.

Because B Ltd and C Ltd are both 100% subsidiaries of A Ltd, HMRC says Schedule 7 group relief can apply, provided the conditions for that relief are met.

What this means in practice

The practical effect is that a transfer from an LLP to a company in the same group is not automatically free of SDLT just because the parties are connected. You must first apply the partnership rules.

In the example, those rules produce a charge on only half the market value. That reflects the idea that B Ltd already had a 50% partnership interest, so the only real acquisition is the other 50%.

Once that deemed acquisition is identified, you then ask who that 50% is treated as coming from. HMRC’s view is that it is effectively coming from C Ltd. If C Ltd and B Ltd are members of the same group, group relief may then relieve that SDLT charge.

So there are two separate stages:

• work out the SDLT charge under the partnership code; then
• consider whether group relief applies to the charge that emerges.

This sequencing matters. Group relief is not a substitute for the partnership analysis. It operates on the result of that analysis.

How to analyse it

A sensible way to approach this type of transaction is as follows.

• Identify whether the transfer is from a partnership or LLP. If it is, the special partnership rules may override the more obvious contractual analysis.
• Work out who the relevant owner is immediately after the transaction.
• For each relevant owner, identify the corresponding partner or partners immediately before the transaction.
• Calculate the lower proportion for each corresponding partner. This requires comparing:
  • the proportion of the chargeable interest attributable to that partner, and
  • that partner’s partnership share.
• Add the lower proportions together if there is more than one.
• Apply the Schedule 15 formula to find the chargeable consideration, usually by reference to market value.
• Only after that, ask whether any relief applies, including group relief.
• For group relief, check whether the companies involved satisfy the conditions in Schedule 7. The manual expressly says relief applies only if those requirements are met.

The key question is often: what part of the property is, in substance, being acquired from another group company rather than merely representing the transferee’s pre-existing partnership interest?

Example

Illustration: An LLP owns land worth £1 million. B Ltd and C Ltd are the relevant corporate participants, and each has a 50% partnership share. The LLP transfers the whole property to B Ltd.

Under the partnership rules, B Ltd is the relevant owner and also the corresponding partner. B Ltd ends up with 100% of the property, but its partnership share was only 50%. The lower proportion is therefore 50%.

The chargeable consideration is market value multiplied by 50%, so SDLT is worked out on £500,000 rather than the full £1 million.

HMRC’s analysis is that this reflects B Ltd effectively acquiring C Ltd’s 50% interest. If B Ltd and C Ltd are both 100% subsidiaries of the same parent and the group relief conditions are satisfied, group relief may relieve that SDLT charge.

Why this can be difficult in practice

These cases can be difficult because two distinct legal frameworks are interacting: the partnership charging rules and the separate relief for group transfers.

Several points can be fact-sensitive:

• The exact partnership shares and entitlement to the property immediately before and after the transfer.
• Whether the entity said to be a corresponding partner qualifies as such under the legislation.
• Whether the transaction should truly be analysed as a transfer from the other partners to the transferee company.
• Whether all the statutory conditions for group relief are met at the relevant time.

The source material also includes a specific statement that C Ltd cannot be a corresponding partner because it is not an individual. That is part of HMRC’s worked analysis on these facts, but readers should be careful not to generalise beyond the statutory wording and the precise context of the example without checking the underlying legislation.

Another practical difficulty is that the market value charge under the partnership rules can arise even where no conventional purchase price is paid. That can catch readers by surprise if they focus only on the transfer document and not on the deeming rules.

Key takeaways

• Where land is transferred from an LLP or partnership, SDLT must first be worked out under the special partnership rules.
• In the HMRC example, only 50% of market value is charged because the transferee company is treated as already having a 50% economic interest.
• Group relief may then apply to that charge if, in substance, the transferred interest is treated as coming from another company in the same group and the Schedule 7 conditions are satisfied.

Source: HMRC Stamp Duty Land Tax Manual, SDLTM34460, “Application of exemptions and reliefs: Group Relief”.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Group Relief for LLP to B Ltd Property Transfer

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