Guide to Calculating Sum of Lower Proportions for Relevant Property Transactions

Calculating the Sum of the Lower Proportions in Partnership SDLT Transactions

This SDLT rule applies to some partnership land transactions and works out how much of a property interest can be matched to partners or people connected with them. The calculation follows a set five-step process: identify relevant owners and corresponding partners, apportion the post-transaction interests, then cap each amount by the partner’s attributable partnership share. The total of those capped amounts is the “sum of the lower proportions”, which can affect the SDLT chargeable consideration.

• A relevant owner is someone entitled to part of the property immediately after the transaction who, immediately before it, was either a partner or connected with a partner.
• A corresponding partner is a person who was a partner immediately before the transaction and is either the same person as the relevant owner or an individual connected with that owner.
• Each relevant owner’s share after the transaction is apportioned between their corresponding partners, and the legislation allows this to be done in the most beneficial way.
• For each corresponding partner, you compare the amount apportioned to them with their attributable partnership share and take the lower figure.
• If there is no relevant owner with a corresponding partner, the result is nil; if property is held by beneficial joint tenants, they are treated as holding equal shares for this calculation.
• The rule can be difficult where connected-person issues, trustee companies, or changes between the position immediately before and immediately after the transaction affect the analysis.

Scroll down for the full analysis.

How to calculate the “sum of the lower proportions” for certain partnership SDLT transactions

This page explains a technical SDLT rule used in some partnership transactions. The rule works out how much of a property interest can be matched to partners or people connected with partners when land moves into or out of a partnership structure. That figure, called the “sum of the lower proportions”, can affect the chargeable consideration used for SDLT.

What this rule is about

The source material deals with paragraph 20, which applies where paragraph 18 applies. In broad terms, this is part of the special SDLT code for partnership transactions. The calculation is designed to measure the overlap between:

• who owned the land through the partnership side of the transaction before it happened, and
• who is entitled to the land after the transaction, either directly or through connected persons.

The legislation does not simply ask who owned what before and after in a broad sense. It sets out a structured five-step calculation. The key idea is that, for each person ending up with an interest after the transaction, you identify any partner or connected partner who can be linked to that person, then compare two figures and take the lower one.

What the official source says

The official material sets out five steps.

Step 1 is to identify the “relevant owner” or owners. A person is a relevant owner if, immediately after the transaction, they are entitled to a proportion of the chargeable interest and, immediately before the transaction, they were either:

• a partner, or
• connected with a partner.

Step 2 is to identify that relevant owner’s “corresponding partner” or partners. A person is a corresponding partner for a relevant owner if, immediately before the transaction, that person:

• was a partner, and
• was either the relevant owner, or an individual connected with the relevant owner.

If there is no relevant owner with a corresponding partner, the sum of the lower proportions is nil.

Step 3 is to take each relevant owner’s proportion of the chargeable interest immediately after the transaction and apportion that proportion between one or more of that owner’s corresponding partners. The source makes an important point here: there is no fixed method for this apportionment, and it may be done in the way that gives the most beneficial result.

Step 4 is to find the “lower proportion” for each person who is a corresponding partner in relation to one or more relevant owners. For each such person, compare:

• the proportion of the chargeable interest attributable to that partner under the Step 3 apportionment, and
• the partnership share attributable to that partner.

The lower of those two figures is that person’s lower proportion.

If a partner is a corresponding partner for only one relevant owner, the attributable proportion is the amount apportioned to them for that owner. If they are a corresponding partner for more than one relevant owner, the attributable proportion is the total apportioned to them across all those relevant owners.

Step 5 is to add together the lower proportions for all corresponding partners. The total is the “sum of the lower proportions”.

The source also includes two specific interpretive rules:

• If people hold the chargeable interest as beneficial joint tenants, they are treated for this purpose as if they hold it as beneficial tenants in common in equal shares.
• For Step 2(b), a company can be treated as an individual connected with the relevant owner, but only to the extent that it holds property as trustee and is connected with the relevant owner only because of section 1122(6) of the Corporation Tax Act 2010.

What this means in practice

This is not a general ownership test. It is a targeted matching exercise.

In practice, you need to identify:

• who is entitled to the land immediately after the transaction,
• whether each of those people was, before the transaction, either a partner or connected with a partner,
• which partners can be treated as corresponding partners for them, and
• how much of the post-transaction entitlement can be allocated to those corresponding partners without exceeding the relevant partnership shares.

The rule matters because the final figure is not necessarily the whole of the post-transaction entitlement. For each corresponding partner, the legislation caps the amount counted by reference to the lower of two figures. So even if a large share is apportioned to a partner at Step 3, only the lower amount counts if that partner’s partnership share is smaller.

The source also gives a degree of flexibility at Step 3. Because there is no prescribed method of apportionment, the allocation between corresponding partners can be arranged in the way that produces the most favourable result. That does not remove the need to stay within the statutory framework, but it does mean the calculation is not purely mechanical where more than one corresponding partner is available.

How to analyse it

A sensible way to approach the calculation is as follows.

1. Identify the chargeable interest and the proportions held immediately after the transaction.

   You need to know exactly who is entitled after completion, and in what proportions. If the interest is held by beneficial joint tenants, treat them as holding equal shares.

2. List all possible relevant owners.

   Ask, for each post-transaction owner: were they immediately before the transaction either a partner or connected with a partner? If not, they are not a relevant owner for this calculation.

3. For each relevant owner, identify all corresponding partners.

   The corresponding partner must have been a partner immediately before the transaction and must be either the same person as the relevant owner or an individual connected with that relevant owner. If none exists for any relevant owner, the result may be nil.

4. Apportion each relevant owner’s post-transaction share.

   Allocate that share across one or more corresponding partners. The source expressly says there is no set method and that the apportionment can be done in the most beneficial way.

5. Apply the cap for each corresponding partner.

   For each corresponding partner, total the amount apportioned to them. Then compare that total with the partnership share attributable to that partner. Take the lower figure.

6. Add the lower figures together.

   That total is the sum of the lower proportions.

Questions to ask while doing this:

• Who exactly is entitled to the chargeable interest immediately after the transaction?
• What was each person’s status immediately before the transaction: partner, connected person, or neither?
• Are there multiple corresponding partners for one relevant owner?
• What apportionment produces the best result within the legislation?
• What is each corresponding partner’s partnership share?
• Is any ownership held as beneficial joint tenancy, requiring equal-share treatment?
• Is a company involved only as trustee in a way that triggers the special rule in paragraph 20(3)?

Example

This is only an illustration of the mechanics.

Assume that immediately after the transaction, A owns 60% of the chargeable interest and B owns 40%.

Immediately before the transaction:

• A was connected with partners P1 and P2,
• B was not a partner and was not connected with a partner,
• P1 and P2 were both partners.

Only A is a relevant owner. B is ignored for this calculation.

A’s 60% share must then be apportioned between A’s corresponding partners, P1 and P2. Suppose the apportionment chosen is:

• 30% to P1
• 30% to P2

Now compare those amounts with the partnership shares attributable to P1 and P2. If P1’s partnership share is 20% and P2’s partnership share is 35%, their lower proportions are:

• P1: lower of 30% and 20% = 20%
• P2: lower of 30% and 35% = 30%

The sum of the lower proportions is therefore 50%.

If a different Step 3 apportionment would produce a better result, the source indicates that this can be used.

Why this can be difficult in practice

The main difficulty is that the calculation depends on several linked definitions and two different moments in time: immediately before and immediately after the transaction. A small factual difference can change whether someone is a relevant owner or a corresponding partner.

Another difficulty is the Step 3 apportionment. The source says there is no set method and that the apportionment may be performed to give the most beneficial result. That is helpful, but it also means the person doing the calculation must understand all possible corresponding-partner links and compare outcomes carefully.

Connected-person questions can also be awkward, especially where trusts or companies are involved. The source includes a specific rule for a company acting as trustee in limited circumstances. That suggests the ordinary connected-person analysis may not always fit neatly when trustee companies are involved.

Finally, the rule for beneficial joint tenants is easy to miss. For this calculation, joint tenants are treated as if they hold equal shares as tenants in common. That may differ from how ownership is described in ordinary conveyancing documents.

Key takeaways

• The “sum of the lower proportions” is a structured statutory calculation, not a general impression of who owned the property before and after.
• You identify relevant owners and corresponding partners, apportion post-transaction shares, then cap each amount by the partner’s attributable partnership share.
• The apportionment at Step 3 is flexible and may be done in the most beneficial way, but the final amount for each corresponding partner is still limited to the lower of the two statutory figures.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide to Calculating Sum of Lower Proportions for Relevant Property Transactions

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