Stamp duty when a company partnership transfers property to a partner
In brief
When an all-company partnership transfers property to one of its company partners, stamp duty may be based on market value rather than the price paid. In HMRC’s example, an 80% partnership share makes a £5 million market value the relevant amount.
- Check the five-step lower-proportions calculation.
- The special rule applies at 75% or more.
- Consider group relief separately and check the law at the transaction date.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a company partnership transfers property to a partner
Stamp duty when a company partnership transfers property to a partner
A £1 million price does not always mean stamp duty is based on £1 million. If an all-company partnership transfers property to one of its company partners, the law can use the property’s full market value instead. In HMRC’s example, that means using £5 million.
What this rule is about
Partnership property, particularly when it moves into or out of a partnership under the special stamp duty land tax rules, is not always treated like an ordinary sale. Special rules apply.
The key question, when property is transferred to a partner and the statutory calculation must be applied, is how much is really moving away from that receiving partner. The answer comes from the partner’s share before the transfer and the share they own afterwards.
This can matter even where all the companies have the same parent. A low stated price may not control the stamp duty result.
What the official source says
HMRC gives an example involving a parent company, X. X owns Companies A and B in full. A owns 20% of a partnership and B owns 80%.
The partnership transfers property worth £5 million to B for £1 million. HMRC works through the statutory five-step calculation. It reaches a total of 80%.
- Company B owns the whole property after the transfer.
- Company B was a partner immediately before the transfer.
- Company B is therefore both the relevant owner and its own corresponding partner.
- The whole property interest is allocated to Company B at step three.
- That gives Company B a 100% share of the property after the transfer.
- Company B’s attributable partnership share is 80%.
- The lower of 100% and 80% is 80%.
- There is only one corresponding partner, so the total is 80%.
When every partner is a company immediately before the transfer and the statutory total reaches 75 or more, Schedule 15 paragraph 24 applies to the transaction. The legislation says the amount paid for stamp duty is then the property’s market value.
So, in this example, HMRC says the amount used is £5 million. It is not the £1 million paid by Company B.
What this means in practice
The 75% line is the point that changes the result. At 80%, the special market-value rule applies. It does not simply tax the extra 20% that B did not already hold through the partnership.
That can feel harsh at first. But this rule applies only after the detailed partnership calculation has been made.
- Start with the market value, not just the price written in the transfer document.
- Check who held a partnership share immediately before the transfer.
- Check who owns the property immediately after it.
- Confirm that every partner was a company immediately before the transfer.
- Do not assume a common parent removes the stamp duty charge.
Because A and B are both wholly owned by X, HMRC says that group relief may also require consideration alongside the market-value analysis in this transfer. That is a separate relief question. It does not change the starting market-value result by itself.
How to analyse it
Work through the transfer in order. The labels used in company accounts are not enough. What matters is the legal ownership, the partnership position and the group position at the relevant time.
- Confirm that property is leaving the partnership for a current or former partner, or a connected person.
- List all partners immediately before the transfer.
- Check whether all of them are companies.
- Identify each person entitled to the property immediately after the transfer.
- Match each owner with their corresponding partner.
- Work out the property share allocated to each corresponding partner.
- Compare that figure with their attributable partnership share.
- Add the lower figures together.
- If the result is 75 or more, use market value under the special rule.
- Only then consider whether a separate relief can reduce the result.
Example
Here is HMRC’s illustration. Company B owns an 80% partnership share. The partnership transfers a property worth £5 million to B, which then owns 100% of it. The lower figure is 80%, because 80% is lower than 100%.
All partners are companies and the total is at least 75%. The amount used for stamp duty is therefore £5 million, not the £1 million paid. The example does not state an SDLT rate, so it does not calculate the tax due.
Why this can be difficult in practice
This is the part people get wrong: the partnership share used in the calculation is not always the percentage shown in a current partnership agreement. The statute has rules about when the property entered the partnership and changes in shares since then.
There is also a point to check in the official source. Although HMRC says group relief can apply with changes made by paragraph 27, the current supplied text does not list a paragraph 18 transfer among the transactions it modifies. This point needs checking.
- A current percentage split may not settle the attributable partnership share.
- A historic transfer of the property into the partnership may matter.
- Changes to partners’ shares may affect the calculation.
- Market value needs evidence, especially where the stated price is much lower.
- Group relief has its own conditions and restrictions.
- The manual’s statement about paragraph 27 needs checking against the law that was in force on the transfer date.
Key takeaways
- An all-company partnership transfer can be taxed by reference to market value.
- In HMRC’s example, an 80% result makes £5 million the relevant amount.
- Group relief may be relevant, but it is not automatic and needs separate checking.
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 for stamp duty land tax
- FA 2003 Schedule 15 para 2 — treats partnership property as held by its partners
- FA 2003 Schedule 15 para 18 — sets the basic rule for property leaving partnerships
- FA 2003 Schedule 15 para 20 — calculates the sum of lower proportions
- FA 2003 Schedule 15 para 21 — identifies a partner’s attributable partnership share
- FA 2003 Schedule 15 para 24 — uses market value for certain all-company partnerships
- FA 2003 Schedule 15 para 25 — preserves other available stamp duty land tax reliefs
- FA 2003 Schedule 15 para 27 — modifies group relief for specified partnership transactions
- FA 2003 Schedule 7 para 1 — provides group relief for companies in the same group
- FA 2003 Schedule 7 para 2 — restricts group relief where disqualifying arrangements exist
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 the transaction’s effective date, the nature of the property, or the history used to establish Company B’s attributable partnership share.
- The current supplied text of Schedule 15 paragraph 27 expressly modifies group relief for paragraph 10 transactions and paragraph 17 charges, not paragraph 18 transfers. This differs from the manual’s statement that paragraph 27 modifies group relief in this example. The law in force on the transaction date needs checking.
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 accounts showing each partner’s profit and ownership shares.
- Documents showing when the property entered the partnership and any later changes in partnership shares.
- A valuation of the property at the transfer date.
- The group chart and share rights at the transfer date.
- Details of any planned sale, refinancing, outside funding, or change of control.
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 a company partnership transfers property to a partner [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 for stamp duty land tax https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 15 para 2 - treats partnership property as held by its partners https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/2/2025-11-17 - FA 2003 Schedule 15 para 18 - sets the basic rule for property leaving partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/18/2025-11-17 - FA 2003 Schedule 15 para 20 - calculates the sum of lower proportions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/20/2025-11-17 - FA 2003 Schedule 15 para 21 - identifies a partner's attributable partnership share https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/21/2025-11-17 - FA 2003 Schedule 15 para 24 - uses market value for certain all-company partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/24/2025-11-17 - FA 2003 Schedule 15 para 25 - preserves other available stamp duty land tax reliefs https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/25/2025-11-17 - FA 2003 Schedule 15 para 27 - modifies group relief for specified partnership transactions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/27/2025-11-17 - FA 2003 Schedule 7 para 1 - provides group relief for companies in the same group https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - restricts group relief where disqualifying arrangements exist https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm33850 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 source does not give the transaction's effective date, the nature of the property, or the history used to establish Company B's attributable partnership share. - The current supplied text of Schedule 15 paragraph 27 expressly modifies group relief for paragraph 10 transactions and paragraph 17 charges, not paragraph 18 transfers. This differs from the manual's statement that paragraph 27 modifies group relief in this example. The law in force on the transaction date needs checking. 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 a company partnership transfers property to a partner
Search Land Tax Advice with Google
