Guide on Electing to Dis-apply Para10-12A for Property Investment Partnerships

SDLT election for property investment partnerships

A property investment partnership can choose to dis-apply the usual SDLT partnership transfer rule when land is transferred into the partnership. If it does, SDLT is charged on the market value of the property interest instead, and this can also change how some later transfers of partnership interests are treated.

• The election is only available if the transferee partnership meets the statutory definition of a property investment partnership.
• If made, paragraph 10 does not apply, and paragraph 18 is also switched off if the transfer is from one partnership to another.
• The chargeable consideration becomes the market value of the chargeable interest transferred.
• The election must be made in the land transaction return or by amending that return, and HMRC says it should be notified by letter to its Technical & Guidance Team.
• The election is irrevocable, and if made by amendment it takes effect as if made when the original return was filed.
• It can affect later SDLT outcomes: for later Type B transfers the property may be left out of relevant partnership property, but for later Type A transfers it may still count.

Scroll down for the full analysis.

SDLT: when a property investment partnership can elect out of the partnership transfer rules

This page explains a specific SDLT election available to certain property investment partnerships. The election matters because it changes how SDLT is calculated when land is transferred into a partnership. Instead of using the special partnership rules, the transfer is taxed by reference to the market value of the land. That can also affect how later changes in partnership interests are treated.

What this rule is about

SDLT has special rules for land transactions involving partnerships. One of those rules, in paragraph 10 of the partnership provisions, can apply when a chargeable interest is transferred to a partnership, including where the transferor is a partner.

For partnerships that qualify as a property investment partnership under paragraph 14(8), there is a choice. They can elect for paragraph 10 not to apply. If they do, the transaction is taken out of the special partnership rules in Part 3 for this purpose, and the chargeable consideration becomes the market value of the interest transferred.

This is not a general election for all partnerships. It is only available where the transferee partnership falls within the statutory definition of a property investment partnership.

What the official source says

The HMRC manual says that where paragraph 10 would otherwise apply to a transfer of a chargeable interest to a partnership, a property investment partnership can elect to dis-apply that rule.

If the election is made:

• the transaction is not treated as falling within the special partnership transaction rules in Part 3 for this purpose, and
• the chargeable consideration is the market value of the chargeable interest transferred.

The manual also says that paragraph 18 is dis-applied as well, if it would otherwise be relevant. That matters only where a chargeable interest is passing from one partnership to another partnership.

The election must be included in the land transaction return for the transaction, or in an amendment to that return. It is irrevocable. A return cannot be amended to withdraw the election once made.

HMRC says the election should be made by letter to its Technical & Guidance Team.

If the election is made by amending the return rather than in the original return:

• it takes effect as if it had been made on the date the original return was filed, and
• returns for certain later “affected transactions” may be amended, within the normal amendment window, to reflect the election.

An “affected transaction” is defined in the manual as a transaction to which paragraph 14 applied, with an effective date on or after the effective date of the main transaction.

The manual then separates the consequences into immediate and future effects.

The immediate effects are:

• paragraph 10 is dis-applied, and paragraph 18 too if relevant, and
• the chargeable consideration is replaced by the market value of the chargeable interest transferred to the partnership.

The future effects concern later transfers of interests in the property investment partnership:

• for a later Type B transfer, the chargeable interests that were the subject of a paragraph 12A election do not count as relevant partnership property;
• for a later Type A transfer, an election under paragraph 12A does not stop those chargeable interests from being relevant partnership property.

What this means in practice

The practical point is that this election changes both the immediate SDLT calculation on the transfer into the partnership and the way that land may be treated in some later partnership interest transfers.

Without the election, the transfer would be dealt with under the special partnership rules, assuming paragraph 10 applies. With the election, the transfer is instead taxed on market value.

That can matter where the special partnership rules would otherwise produce a different result from a market value basis. The election is therefore not just an administrative step. It changes the legal basis on which SDLT is charged.

The election can also have knock-on effects for later transactions involving interests in the partnership. The manual draws an important distinction between Type A and Type B transfers. For later Type B transfers, property that was subject to the election is left out of relevant partnership property. For later Type A transfers, the election does not stop that property from still being relevant partnership property.

So the election may affect not only the current transfer into the partnership, but also later SDLT outcomes if partnership interests are transferred after that.

How to analyse it

A sensible way to approach this issue is to work through the following questions.

• Is there a transfer of a chargeable interest to a partnership?
• Would paragraph 10 otherwise apply to that transfer?
• Is the transferee partnership a property investment partnership within paragraph 14(8)? If not, the election is not available.
• If the election is made, what is the market value of the chargeable interest transferred? That becomes the chargeable consideration.
• Is paragraph 18 potentially relevant because the transfer is from one partnership to another? If so, the election also dis-applies paragraph 18.
• Has the election been made in the land transaction return or by amendment within the permitted amendment process?
• Have you considered the future effect on later paragraph 14 transactions, especially whether a later transfer would be Type A or Type B?

It is also important to separate two issues that can easily get blurred:

• whether the partnership qualifies as a property investment partnership, which determines whether the election is available at all; and
• what the SDLT effect of making the election will be, both now and for later partnership transactions.

Example

Illustration: A partner transfers a property into a partnership. Assume paragraph 10 would otherwise apply, and assume the partnership is a property investment partnership within the statutory definition.

If no election is made, the transfer is dealt with under the special partnership rules.

If an election is made under paragraph 12A, paragraph 10 is dis-applied. The transfer is then charged by reference to the market value of the property interest transferred. If the election is made later by amending the return, it is treated as if made when the original return was filed.

If, after that, there is a later transfer of an interest in the partnership that falls within the Type B rules, the property transferred under the election is not counted as relevant partnership property for that later Type B transaction. But if the later transfer is a Type A transfer, the election does not prevent the property from being treated as relevant partnership property.

Why this can be difficult in practice

The main difficulty is that this rule sits inside the wider SDLT partnership code, which is technical and highly fact-sensitive.

Several points may need careful analysis:

• whether paragraph 10 actually applies in the first place;
• whether the partnership really falls within the definition of a property investment partnership in paragraph 14(8);
• the correct market value of the chargeable interest transferred;
• whether there are later transactions that are “affected transactions” and still within the amendment window;
• whether a later transfer is Type A or Type B, because the future effect of the election differs.

The manual gives the effect of the election, but it does not fully unpack all of those underlying concepts on this page. In practice, the result may depend on how the wider partnership provisions apply to the facts.

There is also an important finality point. The election is irrevocable. Once made, it cannot be withdrawn by amending the return. That makes the timing and analysis significant before the election is submitted.

Key takeaways

• A property investment partnership can elect for paragraph 10 not to apply to a transfer of land into the partnership.
• If the election is made, SDLT is charged on the market value of the chargeable interest transferred, and paragraph 18 is also dis-applied if relevant.
• The election is irrevocable and can affect later partnership interest transfers differently depending on whether they are Type A or Type B transactions.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Electing to Dis-apply Para10-12A for Property Investment Partnerships

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