Stamp duty when land moves from one partnership to another
Partnership-to-partnership transfers
When land moves from one partnership to another, SDLT may be based on the part of its value that has not remained with the relevant partners.
- Calculate the transfer under both applicable partnership rules.
- Use the higher result.
- HMRC’s example produces 55% of market value.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when land moves from one partnership to another
A transfer of land from one partnership to another can trigger stamp duty land tax, even where some people are involved in both firms. In HMRC’s example, HMRC works out SDLT on 55% of the land’s market value. You may need two calculations, and the higher one determines the result.
What this rule is about
Rather than treating partnership land as if a wholly separate company owned it, the rules look through the partnership to the economic interests of its partners before and after the move. That approach differs from the treatment of land owned by a completely separate company.
When one partnership transfers land to another, this distinction matters. Some partners may remain involved. Others may leave the picture. Instead, the tax result can turn on the shares each person holds before and after the transfer, even where no cash changes hands between them. Cash is not the deciding factor.
This is not the usual house-buying stamp duty question. It is a rule for partnership property, such as land used or held by a business.
What the official source says
HMRC’s manual considers land moving from Partnership 1 to Partnership 2. When land leaves Partnership 1 and enters Partnership 2, you must apply both the rule for land entering a partnership and the rule for land leaving one. Compare the results.
Schedule 15 paragraph 23 says that, in this position, you work out both amounts. You then use the higher amount as the amount treated as paid for SDLT.
- Partnership 1 has four equal partners: A, B, C and D.
- Each of them has a 25% share in Partnership 1.
- Partnership 2 has three partners: A has 20%, B has 60%, and E has 20%.
- No connection exists between the people in the example.
- Because A and B appear on both sides of the transfer, both calculations must take account of them as relevant people in their respective stages. They matter twice.
- E is not counted as a corresponding partner because E is not connected with A or B.
For the transfer into Partnership 2, the manual compares, for every relevant person, each former 25% economic share in the land with that person’s new share in the second partnership. That comparison produces the lower figures.
- For A, the lower figure is 20%: 25% compared with 20%.
- For B, the lower figure is 25%: 25% compared with 60%.
- Adding the two lower figures gives 45%.
- That leaves 55%.
- Accordingly, the amount treated as paid is 55% of market value.
Next, HMRC’s manual repeats the exercise under the rule for land leaving Partnership 1. It produces the same answer: 45% counts as retained, leaving 55% of market value.
What this means in practice
You might think that A and B still have an interest in the land, so no SDLT should arise. That is not how this example works. Instead, the law measures the part of the economic interest that has not stayed with the same people in the required way.
In this example, the retained amount is 45%. SDLT is worked out using the remaining 55%. You then apply the applicable SDLT rates to that amount, subject to the rules for the particular land and transaction date.
- Do not assume that no cash payment means no SDLT amount.
- Get a proper market value for the land being transferred.
- Check the shares in both partnerships at the right times.
- Check whether any people are connected for SDLT purposes.
- Run both calculations where the transfer falls within both rules.
How to analyse it
Start with what actually happens to the land. Then identify who had an economic share before the move and who has one afterwards. Names alone do not settle the answer.
- Confirm that the land was partnership property of the first partnership.
- Confirm that it becomes partnership property of the second partnership.
- List the partners and their profit shares immediately before the transfer.
- List the partners and their profit shares immediately after the transfer.
- Identify people with an interest in the land on the relevant side of each calculation.
- Identify their corresponding partners, including any connected individuals where relevant.
- Work out each lower percentage and add them together.
- Calculate the balance of the market value under each rule.
- Use the higher of the two results if both rules apply.
What actually decides the result? It is the percentage that remains with the right people, measured under the statutory steps. A small change in a profit share can change the SDLT amount.
Example
Take HMRC’s figures and assume the transferred land is worth £1,000,000. Although A held a 25% interest before the transfer, A holds only a 20% share in Partnership 2, so A contributes 20% to the retained amount. B had a 25% interest before but a 60% share afterwards, so B contributes 25%. Together that is 45%.
At 55%, the balance means that the amount used for the SDLT calculation is £550,000: 55% of £1,000,000. HMRC’s second calculation produces the same £550,000 result, so that is the figure used.
This does not mean the SDLT bill is £550,000. It is the amount to which the relevant SDLT rules and rates are applied.
Why this can be difficult in practice
Usually, the arithmetic is not the hard part. Getting the starting facts right is harder. Partnership agreements may change over time, and a person’s attributed partnership share can depend on earlier events.
HMRC’s manual gives its view through a neat example. Real arrangements can be much less neat. The legislation, not the manual, decides the result.
- A capital share may not be the same as the profit share used by the legislation.
- People may be connected even if they are not partners together.
- Historic changes in partnership membership can matter.
- The rules for a share attributed to a partner include special historic conditions.
- Land may be transferred with other rights, debt arrangements or leases.
- A valuation can be disputed, especially where the land is unusual.
Key takeaways
- Land moving between partnerships can require two SDLT calculations.
- Where both rules apply, use the higher result.
- In HMRC’s example, SDLT is based on 55% of market value.
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 special SDLT rules for partnerships
- FA 2003 Schedule 15 para 10 — land transferred into a partnership
- FA 2003 Schedule 15 para 12 — calculating retained ownership on transfers into partnerships
- FA 2003 Schedule 15 para 18 — land transferred out of a partnership
- FA 2003 Schedule 15 para 20 — calculating retained ownership on transfers out of partnerships
- FA 2003 Schedule 15 para 21 — working out a partner’s attributed partnership share
- FA 2003 Schedule 15 para 23 — choosing the higher result for partnership transfers
- FA 2003 Schedule 15 para 34 — meaning of partnership property and partnership share
- FA 2003 Schedule 15 para 35 — when land moves into or out of partnerships
- FA 2003 Schedule 15 para 39 — connected persons test 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 source does not give a transaction date. The relevant law and SDLT rates must be checked for the effective date of the real transfer.
- The supplied legislation is recorded only up to 17 November 2025. Current primary legislation must be checked for a transaction after that date.
- The source gives the attributed shares used for the calculation but does not provide the earlier transactions needed to test those figures independently.
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 agreements and profit-sharing arrangements before and after the transfer
- Documents showing who owned the land before the transfer
- The transfer deed and details of the land moved
- Evidence of the land’s market value on the transaction date
- Details of any family, company, trust or other connection between the parties
- Records of when the land first became partnership property and any SDLT paid then
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 land moves from one partnership to another [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 special SDLT rules for partnerships https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 15 para 10 - land transferred into a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/10/2025-11-17 - FA 2003 Schedule 15 para 12 - calculating retained ownership on transfers into partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 15 para 18 - land transferred out of a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/18/2025-11-17 - FA 2003 Schedule 15 para 20 - calculating retained ownership on transfers out of partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/20/2025-11-17 - FA 2003 Schedule 15 para 21 - working out a partner's attributed partnership share https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/21/2025-11-17 - FA 2003 Schedule 15 para 23 - choosing the higher result for partnership transfers https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/23/2025-11-17 - FA 2003 Schedule 15 para 34 - meaning of partnership property and partnership share https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/34/2025-11-17 - FA 2003 Schedule 15 para 35 - when land moves into or out of partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/35/2025-11-17 - FA 2003 Schedule 15 para 39 - connected persons test for partnership transactions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/39/2025-11-17 Guidance page from HMRC on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33830 HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from HMRC is its 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 source does not give a transaction date. The relevant law and SDLT rates must be checked for the effective date of the real transfer. - The supplied legislation is recorded only up to 17 November 2025. Current primary legislation must be checked for a transaction after that date. - The source gives the attributed shares used for the calculation but does not provide the earlier transactions needed to test those figures independently. 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 land moves from one partnership to another
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