Partners are not automatically connected for SDLT
Partners and SDLT connection
For the special SDLT rules on property transfers involving partnerships, partners are not automatically connected simply because they are in the same partnership.
- Check for another relationship that may create a connection.
- Use the special trustee rule only for lower-proportions calculations.
- Check ownership and partnership shares at the relevant time.
Scroll down for the full analysis.
Read the original guidance here:
Partners are not automatically connected for SDLT
For stamp duty on property that moves into or out of a partnership, the parties are not connected just because they are business partners. This point can affect the tax calculation. It matters most when property ownership and partnership shares overlap.
What this rule is about
These special SDLT rules apply when property goes into a partnership or comes out of one, and they govern the tax result of that move. They use a figure called the sum of the lower proportions. In simple terms, it shows how much ownership stays with the same people.
A connected-person test helps work out that figure. The test comes from corporation tax law. Schedule 15 changes it for these SDLT rules.
What the official source says
HMRC’s manual says the usual connected-person test applies to Part 3 of Schedule 15, but there are two important changes. The legislation makes those changes.
- Two people do not become connected just because they are members of the same partnership.
- This does not prevent them from being connected for some other reason.
- When working out lower proportions under paragraphs 12 and 20, certain rules that connect a trustee with a settlement do not apply.
What this means in practice
People who run a business together are not connected just because they are partners, even if they share its work, income and decisions. This rule stops the lower-proportions calculation from counting too many people.
The reverse mistake is risky too. One partner may have a separate link with another person. Partnership membership alone is not enough.
- Check each person’s relationship with the property owner.
- Do not assume the partnership agreement settles the tax answer.
- Treat trust arrangements separately from ordinary partnership links.
How to analyse it
First, identify the property transfer. Then, at the required time, trace who owns the property, the relevant partnership shares, and any links that could affect the result. Labels in the paperwork do not decide it.
- Confirm that the transfer falls within Part 3 of Schedule 15.
- Identify who owned the property before and after the transfer.
- Record each person’s share in the partnership at the relevant time.
- Ask whether anyone is connected for a reason other than being partners.
- For a lower-proportions calculation, apply the special trustee change in paragraphs 12 or 20.
Example
Amira owns the property on her own. She transfers it to a partnership. After the transfer, Amira has a 40% partnership share. Ben has a 60% share. Ben is not connected with Amira just because he is her partner. Ben is not a corresponding partner for the lower-proportions calculation just because he is a member. A separate connection could change that result.
Why this can be difficult in practice
This is where people go wrong: “connected” has a meaning set by statute. Do not use the ordinary meaning of the word. It is not about whether people know, work with or trust each other.
Trusts can add another layer. The special trustee omission is narrow. It applies only to the two lower-proportions calculations. It does not automatically apply to every question under the partnership rules.
- A family or company link may matter even where partnership membership does not.
- Small changes in shares can change the calculation.
- Ownership records and trust documents may not match the commercial story.
Key takeaways
- Partners are not connected solely because they are partners.
- Other links can still make people connected.
- For lower-proportions calculations, the rules for trustees change.
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 Schedule 15 para 9 — partnership transactions covered by the special rules
- FA 2003 Schedule 15 para 12 — calculating lower proportions on transfers into partnerships
- FA 2003 Schedule 15 para 20 — calculating lower proportions on transfers from partnerships
- FA 2003 Schedule 15 para 39 — modified connected-person rules for partnership transactions
- an Act of 2010 we do not have an identifier for section 112 — when people and entities are connected (no link: an Act of 2010 we do not have an identifier for)
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
- Whether people are connected for a reason other than their partnership membership depends on the full facts and the remaining parts of Corporation Tax Act 2010 section 1122.
- The lower-proportions calculation depends on ownership and partnership shares immediately before and after the transfer.
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 partnership agreement and any changes to partnership shares
- documents showing who owned the property before and after the transfer
- trust documents where a trustee or settlement is involved
- details of any family, company or other relationship between those involved
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 Partners are not automatically connected for SDLT [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 Schedule 15 para 9 - partnership transactions covered by the special rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/9/2025-11-17 - FA 2003 Schedule 15 para 12 - calculating lower proportions on transfers into partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 15 para 20 - calculating lower proportions on transfers from partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/20/2025-11-17 - FA 2003 Schedule 15 para 39 - modified connected-person rules for partnership transactions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/39/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - when people and entities are connected HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33410 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 - Whether people are connected for a reason other than their partnership membership depends on the full facts and the remaining parts of Corporation Tax Act 2010 section 1122. - The lower-proportions calculation depends on ownership and partnership shares immediately before and after the transfer. 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: Partners are not automatically connected for SDLT
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