Stamp duty on rent when a partnership grants a lease
Partnership leases and rent
When a partnership grants or transfers a lease out, SDLT may apply to a reduced part of the rent’s net present value.
- Check whether the special partnership rule applies.
- Calculate the partners’ retained share carefully.
- Keep rent and any premium as separate calculations.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty on rent when a partnership grants a lease
If a partnership grants a lease to a partner, rent can count for stamp duty. Not all future rent necessarily enters the calculation. Only the part linked to the share that has left the partnership may be used.
What this rule is about
A lease can involve two possible payments: a lump sum, often called a premium, and rent. Stamp duty land tax, or SDLT, can look at both. While the lump sum follows one set of rules and rent follows another, an ordinary lease can bring both payments within the SDLT calculation. The two calculations are separate.
Special rules apply to partnerships. They can apply when land leaves a partnership and goes to a current or former partner, or someone connected with one.
Retained ownership matters because the law considers it. Someone receiving a lease from a partnership may already have held an economic share in the property.
What the official source says
HMRC’s manual explains Schedule 15 paragraph 19. It applies where the transfer-out rule in paragraph 18 applies and rent makes up all or part of the amount paid for the deal.
Under paragraph 18, a transfer by a partnership to a current or former partner, or to someone connected with one, falls within the rule. A grant of a lease can count as a transfer for these rules.
- First, work out the net present value of the rent under the normal lease-rent rules.
- Net present value means a discounted figure for rent due over the lease term.
- Then find the sum of the lower proportions, known as SLP.
- The rent figure used for SDLT is the net present value multiplied by 100% minus SLP.
- The same SLP figure affects the market-value calculation for a premium.
- The rent calculation sits alongside, rather than replaces, the premium calculation.
What this means in practice
Do not simply enter the lease rent into a normal SDLT calculation and stop there, because the partnership transfer-out rule may apply and the partners’ shares may reduce the rent figure used in the calculation. Check that rule first.
Rent does not disappear as a result. Instead, the law uses a percentage of its net present value.
- Read the lease for the full rent schedule and term.
- Check whether the tenant is a current or former partner.
- Check whether the tenant has a connection to a current or former partner.
- Find the ownership position immediately before and immediately after the deal.
- Keep the premium and rent calculations separate.
- Do not assume that a nil cash premium means there is no SDLT issue.
How to analyse it
Sequence matters. Begin with the parties and the legal step, rather than the label used in the paperwork.
- Identify the land interest that the partnership is granting or transferring.
- Ask whether Schedule 15 paragraph 18 applies to that transfer.
- Identify every part of the payment, including rent and any premium.
- Calculate the rent’s net present value under Schedule 5.
- Identify the people who receive a share of the interest after the transfer.
- Match them with the relevant partners before the transfer.
- Work out each lower proportion and add them to get SLP.
- Apply the percentage of 100% minus SLP to the rent figure.
- Consider the premium calculation separately.
What actually decides the result? Usually, it is the partnership share history. Rent under the lease may be simple. Establishing the right SLP often is not.
Example
Imagine that a partnership grants Sam a lease. Sam is already a partner. Under the normal Schedule 5 method, the rent has a net present value of £100,000. The partnership-share calculation produces an SLP of 60%.
At 100% minus 60%, the relevant percentage is 40%. The rent figure used in the special calculation is therefore £40,000. Where the lease also has a premium, the law applies the related partnership rule separately to its market value. That calculation remains separate.
This example does not give a final SDLT bill. Final result also depends on the lease, the land and the rules in force on its effective date.
Why this can be difficult in practice
People often focus on who signs the lease. That is not enough. The calculation also looks at who had a share in the partnership property and who has a share after the transfer.
Historic records can change the answer. Paragraph 21 can give a partner an attributable share of zero if the earlier transfer into the partnership did not meet the stated stamp duty or SDLT conditions.
- A partnership agreement may not show the full economic share history.
- A person connected with a partner may bring the special rule into play.
- Changes in partners over time can affect the attributable share.
- Joint ownership needs careful treatment under the statutory steps.
- An earlier transfer into the partnership may need checking before calculating SLP.
- A transfer between two partnerships follows a separate rule.
Key takeaways
- Rent can trigger SDLT when a partnership grants a lease out.
- The special rule uses a percentage of the rent’s net present value.
- The partnership ownership history can decide that percentage.
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 4 para 1 — what counts as payment for a land transaction
- FA 2003 Schedule 5 para 2 — how stamp duty on lease rent is calculated
- FA 2003 Schedule 5 para 3 — how future lease rent is discounted
- FA 2003 Schedule 15 para 18 — special rules when a partnership transfers land out
- FA 2003 Schedule 15 para 19 — special rent calculation for partnership lease transfers
- FA 2003 Schedule 15 para 20 — how to calculate the partners’ retained share
- FA 2003 Schedule 15 para 21 — how a partner’s attributable share is found
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 depend on partnership agreements, historic ownership, connected-person relationships and documents from earlier transfers.
- This page does not calculate the SDLT rate or final tax amount because that requires the lease details, property type and transaction date.
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 lease and any document granting or transferring it
- The partnership agreement and records of each partner’s shares
- Details of who owned the property before and after the transaction
- The rent schedule, lease term and any premium
- Records showing tax or stamp duty paid on the property’s earlier transfer into the partnership
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 on rent when a partnership grants a lease [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 4 para 1 - what counts as payment for a land transaction https://www.legislation.gov.uk/ukpga/2003/14/schedule/4/paragraph/1/2025-11-17 - FA 2003 Schedule 5 para 2 - how stamp duty on lease rent is calculated https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/2/2025-11-17 - FA 2003 Schedule 5 para 3 - how future lease rent is discounted https://www.legislation.gov.uk/ukpga/2003/14/schedule/5/paragraph/3/2025-11-17 - FA 2003 Schedule 15 para 18 - special rules when a partnership transfers land out https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/18/2025-11-17 - FA 2003 Schedule 15 para 19 - special rent calculation for partnership lease transfers https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/19/2025-11-17 - FA 2003 Schedule 15 para 20 - how to calculate the partners' retained share https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/20/2025-11-17 - FA 2003 Schedule 15 para 21 - how a partner's attributable share is found https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/21/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33790 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 depend on partnership agreements, historic ownership, connected-person relationships and documents from earlier transfers. - This page does not calculate the SDLT rate or final tax amount because that requires the lease details, property type and transaction date. 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 on rent when a partnership grants a lease
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