Stamp duty when you put property into a partnership: HMRC example
Putting property into a partnership
HMRC’s example shows that stamp duty can be based on part of a property’s market value, not the money paid.
- A 25% continuing partnership share leaves 75% of value in the example.
- For a £1 million property, that figure is £750,000.
- Profit shares and ownership details need checking carefully.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you put property into a partnership: HMRC example
Stamp duty when you put property into a partnership: HMRC example
Putting a property into a partnership does not always mean stamp duty is based on the cash paid. In HMRC’s example, tax starts with 75% of a £1 million market value: £750,000. Under this special rule, neither the £500,000 payment nor the mortgage sets that figure.
What this rule is about
When a person moves property into a partnership under these special SDLT rules, the calculation measures how much of it that person still retains through their partnership share. That retained share matters.
That sounds abstract. It can significantly change the figure that determines stamp duty.
What the official source says
HMRC’s manual gives an example in which four equal partners, A, B, C and D, each hold 25% of the partnership’s income profits. That is the starting point.
- A puts a property worth £1 million into the partnership.
- The property has a £250,000 mortgage secured on it.
- The partnership pays A £500,000.
- HMRC says the lower proportions total 25%.
- Under the example, SDLT is worked out using 75% of market value.
- That produces a figure of £750,000.
The legislation calls this total the sum of the lower proportions. It compares the former owner’s share in the property with their share after the move. A partner’s share means their share of the partnership’s income profits.
For this rule, HMRC ignores the cash payment and related debt. They do not replace the market-value calculation in this example.
What this means in practice
The key question is not simply how much money changes hands. Instead, ask how much of the property’s value remains with the person who transferred it into the partnership.
- Start with the property’s market value.
- Work out the lower proportions under the statutory steps.
- Subtract that percentage from 100%.
- Apply the result to the market value.
- Then work out SDLT using the rate that applies to the transaction.
This is the part people may miss: a mortgage and a cash payment may be commercially important, but they do not determine the figure under paragraph 10 in HMRC’s example.
How to analyse it
Work through the ownership position before and after the transfer. Because income-profit shares help set the result, the partnership agreement matters.
- Check that the property becomes partnership property.
- Identify who owned it immediately before the transfer.
- List the partners immediately after the transfer.
- Check whether an owner is connected with a partner.
- Find each relevant partner’s income-profit share.
- Work out each lower proportion and add them together.
- Apply the statutory formula to the market value.
Example
Here, A owns a £1 million property and puts it into a four-person partnership. A remains entitled to 25% of its income profits. With lower proportions totalling 25%, 25% of the value is left out. The amount used for the SDLT calculation is £1 million less £250,000: £750,000.
For the paragraph 10 calculation described by HMRC, the £250,000 mortgage and £500,000 paid to A do not alter that result. No tax rate is given in the example. It therefore does not state the final stamp duty bill.
Why this can be difficult in practice
Equal shares make HMRC’s example simple. Real partnerships often do not work that way. Where capital rights, profit rights and practical control point in different directions, each may need careful checking against the partnership documents. The documents are important.
- Do not assume an equal number of partners means equal profit shares.
- Do not treat the cash paid as the automatic SDLT figure.
- Check connected-person relationships as well as named partners.
- Use a sound market valuation for the transfer date.
HMRC’s manual explains its view of the example. The legislation is the law and decides the result if there is a difference.
Key takeaways
- Property put into a partnership can face special SDLT rules.
- Market value may matter more than cash paid or mortgage debt.
- The partnership’s income-profit shares can decide the taxable figure.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- FA 2003 section 104 — makes schedule 15 apply to partnerships
- FA 2003 Schedule 15 para 10 — sets the amount used for property transfers into partnerships
- FA 2003 Schedule 15 para 12 — explains how to work out lower proportions
- FA 2003 Schedule 15 para 34 — defines a partner’s share by income profits
- FA 2003 Schedule 15 para 35 — explains when property is transferred into a partnership
Official guidance
The pages below are HMRC’s guidance. Guidance is not law. It sets out how HMRC reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. HMRC can also change or withdraw guidance, and it may not cover your facts.
Where this is not settled
- The result can change if the partners’ income-profit shares, ownership before the transfer, or connected-person facts differ.
- The applicable SDLT rate depends on the facts and the transaction date.
- This example does not address every possible exception or election under Schedule 15.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The property’s market value at the transfer date
- Who owned the property immediately before the transfer
- The partnership agreement and each partner’s income-profit share
- Whether any person connected with an owner is a partner
- The transfer documents and mortgage details
- The transaction date
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching UK Stamp Duty Land Tax (SDLT), which applies in England and Northern Ireland. MY QUESTION Stamp duty when you put property into a partnership: HMRC example [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - FA 2003 section 104 - makes schedule 15 apply to partnerships https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 15 para 10 - sets the amount used for property transfers into partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/10/2025-11-17 - FA 2003 Schedule 15 para 12 - explains how to work out lower proportions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 15 para 34 - defines a partner's share by income profits https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/34/2025-11-17 - FA 2003 Schedule 15 para 35 - explains when property is transferred into a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/35/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33320 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. HMRC guidance is HMRC's view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - The result can change if the partners' income-profit shares, ownership before the transfer, or connected-person facts differ. - The applicable SDLT rate depends on the facts and the transaction date. - This example does not address every possible exception or election under Schedule 15. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show Finance Act 2003 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 1 September 2026
Useful article? You may find it helpful to read the original guidance here: Stamp duty when you put property into a partnership: HMRC example
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