Stamp duty when you put property into a partnership
Putting land into a partnership
When property moves into a partnership, SDLT may be based on part of its market value. The percentage depends on former ownership, partnership shares and connected partners.
- Use the five-step Schedule 15 calculation.
- A spouse who is a partner may count.
- Check ownership, connections and partnership shares at the relevant times.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when you put property into a partnership
Putting property into a partnership can trigger stamp duty land tax, even if no cash changes hands. The key question is how much of the property, after the transfer and through you and certain connected partners, still remains linked to you. That can decide the value used for SDLT.
What this rule is about
For these SDLT rules, the law does not treat a partnership as though it were a separate owner. Instead, it looks through the partnership to its partners.
This matters when a person transfers land that they own into a partnership. The usual price in the transfer document is not necessarily the figure used for SDLT. Schedule 15 uses a market-value calculation instead.
The calculation gives credit for retained economic ownership, asking which relevant partners, after the transfer, still have a share in the value of land that used to belong to the transferor. That is the focus.
That sounds narrow. It can make a large difference.
What the official source says
HMRC’s manual gives an example involving D, E and F. D owns a freehold property and transfers it to their partnership. D and E each have a 30% share of the partnership’s income profits. F has the remaining 40%.
Their marriage makes D and E connected for this calculation, while D has no connection with F, so HMRC applies the five statutory steps to work out the percentage of market value used for SDLT. The steps matter.
- First, identify each former owner who is a partner after the transfer, or connected with one.
- Here, D is the only former owner who matters because D owned all the property before the transfer.
- Next, identify partners who correspond with that former owner.
- D corresponds with D because D is both the former owner and a partner afterwards.
- E also corresponds with D because E is a connected individual and a partner afterwards.
- F does not correspond with D on the facts in HMRC’s example.
- Then divide D’s former 100% ownership between D and E.
- For each person, compare the amount allocated with that person’s partnership share.
- Use the lower of those two percentages for each person.
- Add those lower percentages together. This total is called the sum of lower proportions, or SLP.
In HMRC’s example, HMRC divides D’s former 100% equally, giving 50% to D and 50% to E, while each person has a 30% partnership share. The lower figure for each is therefore 30%.
The SLP is 60%: 30% plus 30%. The calculation then uses 40% of the property’s market value for SDLT, because 100% minus 60% equals 40%. That is the result.
What this means in practice
You might assume that only D’s own 30% partnership share counts. It does not. HMRC also includes E’s 30% share in its example because E is married to D and is a partner.
That is the part people can miss. A connected partner may increase the SLP and reduce the percentage of market value used for SDLT.
HMRC also shows why the division at the third step matters: if the allocation gave all of D’s former 100% share to D, D’s lower figure would still be only 30%. E’s figure would be nil.
- That would produce an SLP of 30%, rather than 60%.
- The amount used for SDLT would then be 70% of market value.
- Allocating an amount at least equal to a corresponding partner’s partnership share can therefore produce a better result.
- The allocation still has to follow the statutory framework and the actual people who count as corresponding partners.
For illustration, if the market value were £500,000, 40% would be £200,000. That is the amount on which SDLT would be worked out. It is not necessarily the amount of SDLT itself.
How to analyse it
Start with the facts at the two points set by the law, immediately before and immediately after the transfer, rather than beginning with the amount of cash paid. Cash is not the starting point.
- Identify the interest in land being transferred and its market value.
- List everyone entitled to it immediately before the transfer.
- Check who will be a partner immediately after the transfer.
- Check whether a former owner is connected with any of those partners.
- Identify each former owner who meets the relevant-owner test.
- For each one, identify their corresponding partners.
- Find the former owner’s percentage of the property.
- Apportion that percentage between one or more corresponding partners.
- For each corresponding partner, compare the allocated percentage with their partnership share after the transfer.
- Add the lower figures together, then deduct that total from 100%.
The legislation calls the land interest a chargeable interest. Here, that simply means an interest, right or power over land that falls within the SDLT rules.
Example
Take HMRC’s example. D owns 100% of a freehold property. D transfers it into a partnership where D and D’s spouse E each hold a 30% profit share, while F holds 40% and is not connected with D. Those are the relevant shares.
D is the relevant former owner. D and E are the corresponding partners. Allocate 50% of D’s old ownership to each of them. Each has 50% allocated, but each owns only a 30% partnership share. Each lower figure is therefore 30%.
The SLP is 60%. The percentage of market value used for SDLT is 40%.
Change only the allocation. If D receives all 100% and E receives none, the calculation gives lower figures of 30% for D and 0% for E. The SLP falls to 30%, so 70% of market value is used instead.
Why this can be difficult in practice
The arithmetic is straightforward once the inputs are right. Getting the inputs right is often the hard part.
For example, the answer can turn on beneficial ownership rather than just the name shown at the Land Registry, and it can also depend on exactly when someone becomes a partner and what their partnership share is at that point. Timing matters.
- Being a business partner does not, by itself, make two people connected for this rule.
- A spouse who is a partner can matter, even if they owned none of the property before the transfer.
- A profit-sharing percentage needs checking against the partnership agreement.
- Different shares of income, capital and voting rights may need careful review.
- A market valuation is needed because the calculation begins with market value.
- Other steps in a wider arrangement may raise separate SDLT issues not covered by HMRC’s example.
HMRC’s manual is guidance on how HMRC reads and applies the law. The legislation is the legal source. The manual’s example is useful, but it cannot replace checking the actual transaction documents.
Key takeaways
- A transfer of property into a partnership can use market value for SDLT.
- Connected partners can affect how much of that market value is counted.
- The allocation between corresponding partners can materially change the result.
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 — applies the partnership rules in schedule 15
- FA 2003 Schedule 15 para 1 — defines a partnership for these stamp duty rules
- FA 2003 Schedule 15 para 2 — treats partnership property as held by the partners
- FA 2003 Schedule 15 para 10 — sets market-value consideration for property put into partnerships
- FA 2003 Schedule 15 para 12 — calculates the sum of lower proportions
- FA 2003 Schedule 15 para 39 — sets the connected-person rules for partnership transactions
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 best permitted apportionment can depend on the full ownership and connection facts.
- This page does not determine whether another SDLT rule, relief or anti-avoidance provision affects a wider arrangement.
- The supplied statutory text is current only to 17 November 2025. A transaction after that date needs a check against the current legislation.
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 title documents and beneficial ownership position before the transfer
- The signed partnership agreement and profit-sharing terms after the transfer
- Evidence of family or other connections between the people involved
- A supportable market valuation of the land interest transferred
- Documents showing all linked steps, payments and changes in partnership interests
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 [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 - applies the partnership rules in schedule 15 https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 15 para 1 - defines a partnership for these stamp duty rules https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/1/2025-11-17 - FA 2003 Schedule 15 para 2 - treats partnership property as held by the partners https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/2/2025-11-17 - FA 2003 Schedule 15 para 10 - sets market-value consideration for property put into partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/10/2025-11-17 - FA 2003 Schedule 15 para 12 - calculates the sum of lower proportions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 15 para 39 - sets the connected-person rules for partnership transactions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/39/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33570 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 best permitted apportionment can depend on the full ownership and connection facts. - This page does not determine whether another SDLT rule, relief or anti-avoidance provision affects a wider arrangement. - The supplied statutory text is current only to 17 November 2025. A transaction after that date needs a check against the current legislation. 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
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