Non-Resident SDLT Rates: Non-UK Control Test for Companies and Partnerships

SDLT non-resident surcharge: when a general partner is ignored in company control

For the SDLT non-resident surcharge on residential property, a company owned through a limited partnership is not automatically treated as non-UK controlled just because a non-resident general partner has management powers. A general partner is ignored for this control test unless they have, or can obtain, rights to more than 1% of the company’s assets available for distribution to members.

• Where a company is owned through a partnership, the control test looks through the partnership to the individual partners rather than stopping at partnership level.
• A general partner in a limited partnership is not a relevant participator for this purpose if their economic entitlement to the company is no more than 1%.
• Management control on its own is not enough if paragraph 9(7) excludes the general partner from the test.
• The residence position must be tested under the transaction-specific rules in Schedule 9A, not by general assumptions about tax residence.
• HMRC’s example shows that a non-resident general partner with only 0.5% of shares and voting rights is ignored, so the surcharge does not apply on those facts.

Scroll down for the full analysis.

SDLT non-resident surcharge: when a general partner in a limited partnership is ignored for company control

This page explains a narrow but important rule in the SDLT non-resident surcharge for companies. It deals with cases where a company buying residential property is owned through a limited partnership, and one of the partners is a general partner. The question is whether that general partner counts when deciding if the company is under non-UK control. In some cases, the answer is no.

What this rule is about

For the SDLT surcharge on certain non-resident purchases of residential property, a company can be treated as non-resident in relation to a transaction if it meets the statutory non-UK control test. That test looks at who controls the company and whether the people who matter for that test are UK resident or non-resident under the special rules in Schedule 9A to Finance Act 2003.

Where a company is owned through a partnership, the legislation does not simply stop at the partnership level. Instead, corporation tax control rules are applied by looking through to the members of the partnership. That means the residence status of the individual partners may matter.

The specific rule here concerns a general partner in a limited partnership. A general partner may have management control, but paragraph 9(7) says that such a partner is not treated as a relevant participator unless they have more than a very small economic entitlement to the company.

What the official source says

The HMRC manual states that, for the purposes of the surcharge, a general partner in a limited partnership is not a relevant participator unless they possess, or are entitled to acquire, rights entitling them to receive more than 1% of the company’s assets available for distribution to members on a winding up or in other relevant circumstances.

That matters because the non-UK control test in paragraph 9 depends on whether there are relevant participators who control the company and whether those relevant participators are non-UK residents in relation to the transaction.

The manual also explains that, when applying the control rules derived from section 450 and section 439 of CTA 2010 in a partnership context, the test is applied to the members of the partnership rather than to the partnership itself, even if the partnership is an LLP.

In HMRC’s example, a limited partnership owns all the shares in a UK-resident close company. The general partner is non-resident for the transaction, but holds only 0.5% of the shares and voting rights. Because the general partner does not cross the more-than-1% threshold in paragraph 9(7), he is ignored as a relevant participator for this purpose. As a result, his non-resident status does not make the company non-UK controlled, and the surcharge does not apply.

What this means in practice

This is an anti-overreach rule. It prevents a company from being treated as non-UK controlled merely because a general partner has formal management powers but only a minimal economic stake.

In practice, you cannot assume that a non-resident general partner will make the company non-resident for surcharge purposes. You need to ask two separate questions:

• Does the general partner have the kind of control or influence that would normally be relevant under the control rules?
• If so, are they nevertheless excluded by paragraph 9(7) because their entitlement to the company’s distributable assets is not more than 1%?

If the answer to the second question is yes, that partner is ignored as a relevant participator for this part of the test.

This can make a decisive difference where the only non-resident person with apparent control is a general partner with a token or very small stake.

How to analyse it

A sensible way to approach the issue is as follows.

1. Identify that the purchaser is a company and that the non-UK control test in paragraph 9 is potentially relevant.
2. Check whether the company is a close company under the relevant SDLT rules and whether it is excluded from the regime. The HMRC example assumes the company is close and not excluded.
3. Where ownership is through a partnership, apply the control rules by looking at the partners rather than treating the partnership itself as the tested person.
4. Determine each partner’s residence status for the transaction using the correct Schedule 9A residence rule. In the HMRC example, paragraph 5(1) is used because the purchaser is a company and condition A in paragraph 5(3) applies.
5. Identify whether any partner is a relevant participator in the company.
6. If a partner is a general partner in a limited partnership, apply paragraph 9(7). Ask whether that partner has, or can acquire, rights entitling them to receive more than 1% of the company’s assets available for distribution among members on a winding up or in other relevant circumstances.
7. If the general partner does not cross that threshold, ignore them as a relevant participator for this purpose, even if they exercise management control.
8. Then reassess whether the company is controlled by relevant participators who are non-UK resident in relation to the transaction.

The important point is that management power alone is not enough here if paragraph 9(7) removes the general partner from the category of relevant participator.

Example

Illustration based on the HMRC example.

A limited partnership owns 100% of a UK-resident company. The company buys residential property in Northern Ireland. The partnership has one general partner and two limited partners.

The general partner is non-resident for the transaction and has management control over the company, but only a 0.5% shareholding and 0.5% voting rights. The two limited partners are UK resident for the transaction.

At first glance, the non-resident general partner may appear to matter because he can exercise general control. But paragraph 9(7) asks a further question: does he have rights to receive more than 1% of the company’s distributable assets? On these facts, no.

So he is not treated as a relevant participator for this test. His non-resident status is therefore ignored when applying the non-UK control test. On the facts given, the company is not non-UK controlled, so the surcharge does not apply.

Why this can be difficult in practice

The rule is technical because it combines SDLT surcharge legislation with corporation tax control concepts and partnership analysis.

Several points may need careful checking:

• The partnership is not always the endpoint. The legislation may require you to look through to the partners.
• A person may have practical management power without being a relevant participator for this specific test.
• The paragraph 9(7) threshold is based on rights to company assets available for distribution among members, including rights that can be acquired. That may require close reading of constitutional documents and related arrangements.
• The residence test is transaction-specific. A person’s residence for surcharge purposes is determined under Schedule 9A rules, not by general assumptions about where they live or pay tax.

The HMRC example is clear on its own facts, but real structures can be more complicated if there are indirect rights, options, changing partnership interests, or uncertainty about who ultimately has relevant economic entitlements.

Key takeaways

• A non-resident general partner does not automatically make a company non-UK controlled for SDLT surcharge purposes.
• Under paragraph 9(7), a general partner in a limited partnership is ignored unless they have, or can acquire, rights to more than 1% of the company’s distributable assets.
• When a company is owned through a partnership, the control analysis looks to the partners, and each partner’s residence must be tested under the Schedule 9A rules for the transaction.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Non-Resident SDLT Rates: Non-UK Control Test for Companies and Partnerships

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