Stamp duty when a corporate partnership transfers property to a connected company
The short answer
HMRC’s example says that a company connected with a corporate partner can face SDLT on the full market value of property leaving the partnership.
- Company X was connected with a partner but was not a partner itself.
- No corresponding partner existed under the matching test.
- HMRC therefore used the full £5 million market value.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a corporate partnership transfers property to a connected company
Stamp duty when a corporate partnership transfers property to a connected company
A company can face stamp duty land tax when property leaves a partnership, even if it pays little or nothing in cash.
HMRC uses the full £5 million market value in its example. The key point is that the company receiving the property had no matching partnership share.
What this rule is about
The rules handle partnership property differently from property that one person or company owns.
The distinction matters when land moves from a partnership to a company linked to one partner, because the rules compare ownership at both points.
The law tracks the shares. It asks who held an economic share before the move and who owns the property afterwards.
This rule does not focus on the cash price alone. Some partnership transfers use market value. That is the price for which the property would reasonably sell.
What the official source says
HMRC’s manual gives an example involving Companies A and B, which are partners, and Company X, which receives the property.
HMRC’s manual identifies Company X as a relevant owner because it receives a share of the property and had a connection with a partner just before the transfer.
Company X is a relevant owner.
- Company X was not itself a partner before the transfer.
- Companies A and B were the partners, and both were companies.
- A corresponding partner must be the relevant owner or an individual connected with that owner.
- Companies A and B cannot meet that individual connection part of the test.
- There are therefore no corresponding partners for Company X.
- The sum of lower proportions is nil, or zero.
- HMRC counts 100% of the £5 million market value as the amount paid.
The statutory formula for property leaving a partnership produces that result. A zero sum of lower proportions produces the whole market value.
The manual also notes a separate possible issue: group relief. It does not say that the circumstances qualify for relief.
Instead, the manual says that any answer on group relief turns on the partnership’s status and on the relevant provisions governing that relief in the circumstances.
It reaches no conclusion.
What this means in practice
You might assume that a company connected with an existing partner steps into that partner’s shoes. This example shows why that assumption can be wrong.
The detailed matching test matters.
A connection to a partner makes Company X relevant to the calculation, but it does not by itself give Company X a matching partner at the next stage.
That distinction is decisive.
- Do not rely only on the cash paid under the transfer.
- Check who the partners were immediately before the transfer.
- Check who receives the property immediately after it.
- Identify whether the receiving company was a partner before the transfer.
- Check whether the claimed connection is with a person or with another company.
- Get a proper market valuation where market value may apply.
- Keep group relief as a separate question, not an assumption.
How to analyse it
Start with the property and the people involved. Then work through the statutory steps in order.
Skipping the matching stage is the mistake most likely to give the wrong answer.
- Confirm that the property formed part of the partnership property before the transfer.
- Confirm that the property no longer forms part of the partnership property after the transfer.
- List every person or company entitled to a share of it afterwards.
- For every such person or company, check whether that party acted as a partner before the transfer or had a connection with a partner at that time.
- Identify any corresponding partner under the specific statutory test.
- Work out each lower proportion only where a corresponding partner exists.
- Add those proportions to get the total used in the formula.
- Check the special rule that applies to a partnership made wholly of companies.
- Only then consider whether a group relief adjustment is available.
Connected companies alone do not decide this example.
The deciding factor is the absence of a corresponding partner under the matching test.
Example
HMRC’s illustration uses property worth £5 million. Companies A and B are partners.
Company X receives the property. Its connection with a partner makes it a relevant owner.
Yet X was not a partner, and A and B are companies rather than individuals. There is no corresponding partner.
The total is therefore zero. HMRC therefore counts the full £5 million market value as the amount paid for stamp duty purposes.
This example does not calculate the tax due, because that would depend on the property type, transaction date and rates then in force.
Why this can be difficult in practice
Company groups often have several layers of ownership, so even a diagram that appears straightforward can produce a different outcome once you apply the statutory connection and matching rules.
This example also has an important limit. It gives a result for its own facts.
It does not prove the result for every similar transfer.
- Company ownership may change shortly before or after the transfer.
- The partnership agreement may show profit shares that differ from voting rights.
- The company receiving the property may have been a partner at an earlier stage.
- Parties may dispute the market value, especially for unusual land or leasehold property.
- Group relief has conditions and restrictions beyond simple common ownership.
- The transfer date can matter because the law may have changed.
Key takeaways
- Tax law can charge a transfer out of a partnership by reference to market value.
- A connected company does not automatically take the same treatment as a partner.
- In HMRC’s £5 million example, no matching partner meant that HMRC used full 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 partnership rules in schedule 15
- FA 2003 Schedule 15 para 18 — sets the taxable amount for property leaving partnerships
- FA 2003 Schedule 15 para 20 — works out the sum of lower proportions
- FA 2003 Schedule 15 para 24 — special rule for partnerships made wholly of companies
- FA 2003 Schedule 15 para 27A — special group relief adjustment for connected companies
- FA 2003 Schedule 15 para 37 — defines when property leaves a partnership
- FA 2003 Schedule 15 para 39 — applies the statutory test for connected persons
- FA 2003 Schedule 7 para 1 — sets the basic conditions for group relief
- FA 2003 Schedule 7 para 2 — restricts group relief in specified arrangements
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 ownership links between Company X, Company A and Company B. It cannot therefore settle whether any group relief adjustment is available.
- The source does not provide the transaction date. Changes in the law after 17 November 2025 are not covered by the bundled statutory text.
- The source refers back to an earlier example for the full partnership facts, so this page cannot establish facts not repeated in this example.
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 records of each company’s profit share.
- The transfer documents showing exactly what property interest leaves the partnership.
- Company ownership charts immediately before and after the transfer.
- Evidence of why Company X was connected with a partner.
- A supportable market valuation of the property at the relevant date.
- The transaction’s effective date and the law then in force.
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 corporate partnership transfers property to a connected company [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 18 - sets the taxable amount 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 - works out 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 24 - special rule for partnerships made wholly of companies https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/24/2025-11-17 - FA 2003 Schedule 15 para 27A - special group relief adjustment for connected companies https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/27A/2025-11-17 - FA 2003 Schedule 15 para 37 - defines when property leaves a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/37/2025-11-17 - FA 2003 Schedule 15 para 39 - applies the statutory test for connected persons https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/39/2025-11-17 - FA 2003 Schedule 7 para 1 - sets the basic conditions for group relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - restricts group relief in specified arrangements 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/sdltm33870 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 ownership links between Company X, Company A and Company B. It cannot therefore settle whether any group relief adjustment is available. - The source does not provide the transaction date. Changes in the law after 17 November 2025 are not covered by the bundled statutory text. - The source refers back to an earlier example for the full partnership facts, so this page cannot establish facts not repeated in this example. 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 corporate partnership transfers property to a connected company
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