Partnership Land Transfer: Calculating Chargeable Consideration for SDLT Compliance

SDLT when land moves between partnerships

When land is transferred from one partnership to another, SDLT is not always charged on the full market value. Special partnership rules look at how much of the economic ownership stays with the same people. If two partnership rules apply at the same time, both calculations must be done and the higher result is used.

• The calculation focuses on continuing economic ownership, not just the legal transfer of the land.
• For each person involved on both sides, you compare their relevant share before and after the transfer and use the lower percentage.
• Those lower percentages are added together to produce the sum of lower proportions, or SLP.
• The chargeable consideration is worked out as market value multiplied by (100 minus SLP) per cent.
• In the example, A and B are the only matched partners, giving an SLP of 50%, so SDLT is charged on 50% of the land’s market value.
• These rules can be difficult in practice, especially where there are connected persons, changing partnership shares, or more complex ownership arrangements.

Scroll down for the full analysis.

SDLT on land moving from one partnership to another: how the dual partnership rules work

This page explains a specific SDLT problem: land is transferred from one partnership to another, and some of the people involved are partners in both. In that situation, the normal market value rule is modified by special partnership rules. The official example shows how to calculate the chargeable consideration when both sets of partnership rules apply at the same time.

What this rule is about

SDLT has special rules for partnerships because property can move in and out of partnerships without changing hands in the same way as an ordinary sale. If the law looked only at the legal transfer, it could either overtax or undertax transactions where the economic ownership has only partly changed.

Where land moves from one partnership to another, two different rules may potentially apply:

• the rule for transfers from a partnership to a partner, or someone connected with a partner
• the rule for transfers to a partnership from a partner, or someone connected with a partner

If both apply to the same transaction, a further rule says you must calculate the chargeable consideration under both methods and use the higher result.

The practical point is that SDLT is not necessarily charged on the full market value. Instead, the calculation looks at how much of the property is treated as remaining within substantially the same economic ownership.

What the official source says

The official example involves land being transferred from Partnership 1 to Partnership 2.

Before the transfer, Partnership 1 has four equal partners: A, B, C and D. That means each has a 25% share in Partnership 1.

After the transfer, Partnership 2 has partners A, B and E. Their shares are:

• A: 50%
• B: 25%
• E: 25%

The source states that all parties are unconnected, so only A and B matter for the matching exercise. E is not connected to any relevant owner and so is not a corresponding partner for these purposes.

Because A and B are involved on both sides of the transaction, both paragraph 10 and paragraph 18 apply. Paragraph 23 then requires two separate calculations. The chargeable consideration is whichever figure is higher.

In the example:

• the paragraph 10 calculation produces 50% of market value
• the paragraph 18 calculation also produces 50% of market value

So the SDLT charge is based on 50% of the market value of the land transferred to Partnership 2.

What this means in practice

The result reflects the fact that A and B already had an economic interest in the land through Partnership 1, and they continue to have an economic interest through Partnership 2. The partnership rules give credit for that continuing interest, but only to a limited extent.

The method works by identifying the overlap between:

• the person’s share in the land through the transferring or receiving partnership, and
• the person’s partnership share on the other side of the transaction

For each matched person, you take the lower of those two percentages. Those lower percentages are then added together to produce the sum of lower proportions, often shortened to SLP.

The chargeable consideration is then:

market value × (100 − SLP)%

So if the SLP is 50, SDLT is charged on 50% of market value.

In this example, although A has a 50% share in Partnership 2, A only had a 25% interest in the land through Partnership 1 before the transfer. The lower figure is therefore 25%. B’s figure is 25% either way. Added together, that gives an SLP of 50.

The remaining 50% is effectively the part of the property that has moved into different economic hands, mainly because C and D drop out and E comes in.

How to analyse it

When land moves from one partnership to another, a sensible way to analyse the SDLT position is:

1. Identify the partners and their shares in the transferor partnership immediately before the transaction.
2. Identify the partners and their shares in the transferee partnership immediately after the transaction.
3. Check whether the transaction is caught both as:
   • a transfer from a partnership to a partner or connected person, and
   • a transfer to a partnership from a partner or connected person
4. If both rules apply, carry out both statutory calculations.
5. For each calculation, identify the relevant owners and corresponding partners.
6. For each corresponding partner, compare:
   • the proportion of the chargeable interest attributable to that person, and
   • that person’s partnership share
7. Take the lower figure for each person.
8. Add those lower figures together to get the SLP.
9. Apply the formula: market value × (100 − SLP)%.
10. If both paragraph 10 and paragraph 18 apply, use the higher result.

The key question throughout is not simply who is a partner, but how much of the economic interest in the land is treated as continuing in the same hands.

Example

Illustration based on the official example.

Partnership 1 owns land worth £1,000,000. Its partners are A, B, C and D equally, so A and B each have a 25% interest through that partnership.

The land is transferred to Partnership 2, whose partners are A with 50%, B with 25% and E with 25%.

Under the partnership rules, A and B are the only matched persons for the calculation.

• A contributes 25%, because the lower of A’s two relevant percentages is 25%
• B contributes 25%, because the lower of B’s two relevant percentages is 25%

The SLP is therefore 50%.

Chargeable consideration = £1,000,000 × 50% = £500,000.

On the facts of the example, both paragraph 10 and paragraph 18 produce that same result, so SDLT is charged by reference to £500,000.

Why this can be difficult in practice

These rules are technical, and the official example is easier than many real cases.

Difficulties often arise over:

• working out exactly who is a relevant owner and who is a corresponding partner
• whether any person is connected, since that can change the matching exercise
• identifying the correct partnership shares immediately before and immediately after the transaction
• distinguishing between the person’s share in the partnership and the proportion of the chargeable interest attributable to that person
• remembering that where both paragraph 10 and paragraph 18 apply, both calculations must be done even if one initially appears enough

The source example assumes straightforward percentage interests and no connected persons apart from the direct overlap of A and B. More complex profit-sharing arrangements, changing partnership interests, or indirect connections can make the position much harder to apply.

It is also important not to treat the result as a simple exemption for existing partners. The legislation does not remove SDLT just because some partners stay the same. It applies a formula that gives partial credit for continuing economic ownership, and the exact percentage matters.

Key takeaways

• When land passes from one partnership to another, SDLT may be charged on less than full market value if some economic ownership continues in the same hands.
• If both partnership rules apply, both calculations must be performed and the higher result is used.
• In the official example, the chargeable consideration is 50% of market value because the sum of lower proportions is 50%.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Partnership Land Transfer: Calculating Chargeable Consideration for SDLT Compliance

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