Stamp duty when a partnership transfers property to a connected company
Partnership property moved to a company
Where a partnership transfers property to a company connected with a partner, SDLT may start with market value rather than the cash price. HMRC says the special partnership calculation takes priority if both rules apply.
- Check company control and family connections.
- Use the property’s market value.
- Calculate the proportion already retained by relevant partners.
Scroll down for the full analysis.
Read the original guidance here:
Stamp duty when a partnership transfers property to a connected company
Stamp duty when a partnership transfers property to a connected company
When a partnership moves property to a company linked to a partner, it cannot always rely on the price paid. Stamp Duty Land Tax may instead begin with market value. HMRC also says that a separate partnership rule can reduce that value for the part already owned through the partnership.
What this rule is about
The issue arises when a partnership transfers property, such as a freehold, into a limited company. Two different SDLT rules may apply at the same time. One concerns connected companies, while the other concerns property leaving a partnership. The cash price can therefore produce a very different result.
What the official source says
HMRC’s manual gives an example involving a partnership that owns a freehold worth £250,000 and has three partners sharing its profits. The example sets the framework.
A has 60%, while B and C each have 20%. The company pays £200,000. B controls the company. C also counts as controlling it because of her husband’s rights.
- Schedule 15 treats the property as held by the individual partners for these SDLT rules.
- When the connected-company rule is tested, the relationships between the partners can cause every partner, for these SDLT purposes, to be treated as connected with the company. That connection matters.
- Section 53 therefore treats the amount for SDLT as at least the market value: £250,000.
- Because the property is moving from a partnership to a person connected with it, the transfer also falls within the special rule governing those movements. It matters.
- That rule uses market value, less the proportion already retained through relevant partners.
- In HMRC’s example, B and C’s lower proportions total 40%.
What this means in practice
HMRC says that, where both rules apply to the same transfer, the partnership rule takes priority over the connected-company rule. That priority determines the result.
In its example, the £250,000 market value is not the final SDLT figure. The taxable amount is 60% of that value: £150,000. The £200,000 price does not decide the answer.
- Do not assume SDLT follows the price written in the transfer deed.
- Get a sound market valuation at the relevant date.
- Check who controls the company, not only who holds its shares.
- Check family links that can affect control.
- Work out each partner’s share before the transfer.
- Then work out what proportion is treated as already retained after it.
How to analyse it
Start with the facts rather than the label attached to the transaction, because SDLT can look through a company that appears separate in everyday life to the partnership behind it. The legal view is different.
The key question is which part of the property value is moving away from the people who already had an economic share.
- Identify the property held for the partnership business.
- Identify every partner and their profit share.
- Check the company ownership and control position.
- Check whether any partner is connected with the company.
- Find the property’s market value at the effective date.
- Test the connected-company market value rule.
- Test the rule for property leaving a partnership.
- Calculate the lower proportions under paragraph 20.
- Apply HMRC’s stated approach where both rules apply.
Example
Take A, B and C. Their shares are 60%, 20% and 20%.
Their partnership transfers a £250,000 freehold to a company controlled by B and C for £200,000. HMRC first applies the connected-company rule, giving £250,000.
It then applies the partnership calculation. B and C’s 20% shares add up to 40%, so 60% remains. £250,000 multiplied by 60% is £150,000. SDLT is worked out using £150,000, not £200,000 or £250,000.
Why this can be difficult in practice
Although the arithmetic becomes simple once the correct percentages are known, identifying those percentages can require a detailed process for the partners’ retained shares and the partnership’s earlier history. This is the difficult part.
It is also the part people get wrong.
- A profit share may differ from an informal understanding between partners.
- Company control can arise through rights held by a spouse.
- Partnership documents may have changed over time.
- The value must be the market value at the relevant date.
- The source does not say that every transfer to a company gets the same result.
- HMRC’s priority view is guidance, rather than a direct statement in the legislation.
Key takeaways
- A connected company transfer can trigger a market-value SDLT rule.
- The partnership rule may reduce the value used for SDLT.
- In HMRC’s example, the final figure is £150,000.
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 53 — market value rule for connected company transfers
- FA 2003 section 104 — applies special SDLT rules to partnerships
- FA 2003 Schedule 15 para 2 — treats partners as owning partnership property
- FA 2003 Schedule 15 para 18 — value rule for property leaving a partnership
- FA 2003 Schedule 15 para 20 — calculates the partners’ retained property proportion
- FA 2003 Schedule 15 para 21 — works out a partner’s attributable partnership share
- FA 2003 Schedule 15 para 39 — applies connected-person rules to partnership provisions
- an Act of 2010 we do not have an identifier for section 112 — sets out when people and companies are connected (no link: an Act of 2010 we do not have an identifier for)
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 gives one example only. A different ownership structure, control arrangement or partnership history may produce a different result.
- The relevant transaction date is needed before relying on this analysis for a real transfer.
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 profit-sharing records
- Documents showing who owns or controls the company
- Evidence of any marriage or other connection relevant to control
- The property’s market value at the effective date
- The transfer agreement and the price actually paid
- Records of when and how the partnership acquired the property
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 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 53 - market value rule for connected company transfers https://www.legislation.gov.uk/ukpga/2003/14/section/53/2025-11-17 - FA 2003 section 104 - applies special SDLT rules to partnerships https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 15 para 2 - treats partners as owning partnership property https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/2/2025-11-17 - FA 2003 Schedule 15 para 18 - value rule for property leaving a partnership https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/18/2025-11-17 - FA 2003 Schedule 15 para 20 - calculates the partners' retained property proportion https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/20/2025-11-17 - FA 2003 Schedule 15 para 21 - works out 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 39 - applies connected-person rules to partnership provisions https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/39/2025-11-17 - an Act of 2010 we do not have an identifier for section 112 - sets out when people and companies are connected HMRC's guidance page on this topic (guidance, not law): https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm34170 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 gives one example only. A different ownership structure, control arrangement or partnership history may produce a different result. - The relevant transaction date is needed before relying on this analysis for a real transfer. 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 partnership transfers property to a connected company
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