SDLT group relief when a company transfers property to a partnership
SDLT group relief and partnerships
When a company transfers property into a partnership, SDLT can be based on the part of the property’s value that has effectively moved to other partners. A company in the same SDLT group may increase the retained share under paragraph 27A.
- The rule can reduce the value used for the SDLT calculation.
- It does not give automatic relief for the whole transfer.
- The claim must be made in the land transaction return.
Scroll down for the full analysis.
Read the original guidance here:
SDLT group relief when a company transfers property to a partnership
SDLT group relief when a company transfers property to a partnership
Stamp duty land tax can still arise when a company puts property into a partnership. Yet SDLT group relief may reduce the amount used for the calculation where another partner is a company in the same group. This can make a large difference.
What this rule is about
Putting land into a partnership does not resemble an ordinary sale between two unrelated people. The law looks through the partnership to the people or companies behind it.
Put simply, SDLT should reflect the portion of the property that has moved to other partners after the transfer while the transferring company retains an indirect interest through the partnership. That retained interest matters.
Where a company in the same SDLT group is also a partner, paragraph 27A may permit its share to count alongside the transferring company’s share when the calculation identifies relevant corresponding partners. This may increase the amount that counts.
This does not give automatic group relief for the whole transfer. Instead, the rule can reduce the amount used to work out SDLT.
What the official source says
HMRC’s manual illustrates a transfer of a warehouse worth £1,000,000 into an English partnership in which four company partners hold shares of 45%, 35%, 15% and 5%. Those are the partnership shares.
A Ltd transfers the warehouse, while A Ltd and B Ltd are connected and belong to the same SDLT group, C Ltd has the same individual owner but sits outside that group, and D Ltd has no connection. The distinctions matter.
- A Ltd owned all of the warehouse before the transfer.
- A Ltd qualifies as a relevant owner because it becomes, or remains, a partner after the transfer.
- A Ltd is its own corresponding partner after the transfer.
- B Ltd can also count because it is a connected company in the same group.
- C Ltd does not count merely because the same person owns it.
- D Ltd does not count, as no connection links it.
The legislation calls the result of this exercise the sum of the lower proportions. In practice, this means adding the lower of two figures for every partner who can count.
First, the calculation divides the transferred owner’s former share among its corresponding partners, and the Act permits that division to cover one or more of them. HMRC’s example uses an equal split because that gives the best result in those facts.
- A Ltd is given 50% of the warehouse for this step.
- B Ltd is also given 50% of the warehouse for this step.
- A Ltd’s actual partnership share is only 45%.
- B Ltd’s actual partnership share is only 35%.
- The lower figures are therefore 45% and 35%.
- Added together, they give 80%.
That leaves 20% of the warehouse value for the SDLT calculation. On a value of £1,000,000, the amount used is £200,000.
Without paragraph 27A, B Ltd would not count. The total would then be 45%, leaving 55% of the value, or £550,000, for the calculation.
What this means in practice
The difference in the example is £350,000 of property value. It does not mean the tax saving is £350,000. The final SDLT bill depends on the tax rules and rates that apply to the transaction.
Still, the difference can be significant. If your solicitor has said SDLT applies to a transfer into a partnership, this is one of the first points to check.
- Map every partner immediately after the transfer.
- Check who owned the property immediately before it.
- Check whether the companies meet the SDLT group test.
- Do not assume a common shareholder creates an SDLT group.
- Work out each partner’s actual share in the partnership.
- Use a supportable market value for the property.
HMRC’s manual is guidance, not law. The legal basis is in Schedule 15 and Schedule 7 to the Finance Act 2003. If the manual and legislation differ, the legislation takes priority.
How to analyse it
Start with the facts on the transfer date. A group chart drawn after the event is not enough. You need to know who owned what, and who had what rights, at the key time.
- Confirm that property is being transferred into a partnership.
- Identify the company or companies that owned it just before the transfer.
- Identify all partners immediately after the transfer.
- Find the relevant owner or owners under the five-step calculation.
- Find their corresponding partners.
- Test whether another company would count but for the rule that normally covers connected individuals.
- Check that company and the original owner are in the same SDLT group.
- Divide the former owner’s share between the partners who can count.
- Compare each allocated share with that partner’s actual partnership share.
- Add the lower figures and apply the result to the market value.
For this type of partnership transfer, paragraph 27A uses the usual group relief rules while altering some of their operation within the calculation and the related conditions. The changes are specific.
You must make a claim in the land transaction return, or in an amendment to that return. The source says the claim relates to the reduction produced by paragraph 27A.
Example
Here is HMRC’s illustration in plain terms. A Ltd puts a £1,000,000 warehouse into a partnership. A Ltd has a 45% partnership share. B Ltd has a 35% share and is in the same SDLT group as A Ltd.
A Ltd’s former 100% ownership can be split equally between A Ltd and B Ltd. Each is allocated 50%. Yet the lower figures are their real partnership shares: 45% and 35%.
The total is 80%. So 20% of £1,000,000 is used: £200,000. If B Ltd could not count, only A Ltd’s 45% would count. The figure used would instead be 55%, or £550,000.
Why this can be difficult in practice
This calculation can look like a simple percentage exercise. Usually, the hard part is not the maths. It is proving which companies are in the same group and what each partner truly receives.
Common ownership is the point people often get wrong: in HMRC’s example, Mr X owns C Ltd and separately owns the group containing A Ltd and B Ltd, yet that ownership structure alone does not place C Ltd in the same SDLT group as A Ltd. The group test requires more.
- A shared ultimate owner is not always enough for the group test.
- Share percentages alone may not show rights to profits and assets.
- The partnership agreement may give rights that a simple percentage chart misses.
- A later sale or group change can affect relief already claimed.
- Arrangements linked to the transfer can prevent group relief.
- A valuation that is too low can undermine the whole calculation.
The usual group relief rules also contain restrictions for arrangements and tax avoidance. They include rules that can withdraw relief after a relevant group change. The partnership version changes how some of those rules operate.
If you only remember one thing, make it this: test the SDLT group relationship, not just who ultimately owns the companies.
Key takeaways
- SDLT on a transfer into a partnership can be based on market value.
- A same-group company partner may reduce that value under paragraph 27A.
- Common ownership alone does not prove that companies are in the same SDLT group.
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 62 — claims for schedule 7 relief in returns
- FA 2003 section 104 — applies partnership rules to stamp duty land tax
- FA 2003 Schedule 7 para 1 — basic group relief and 75% group test
- FA 2003 Schedule 7 para 2 — restrictions and anti-avoidance conditions for group relief
- FA 2003 Schedule 7 para 3 — when group relief can later be withdrawn
- FA 2003 Schedule 15 para 2 — treatment of partnerships and their partners
- FA 2003 Schedule 15 para 10 — value-based calculation for property transferred to partnerships
- FA 2003 Schedule 15 para 12 — five steps for working out retained shares
- FA 2003 Schedule 15 para 27 — modified group relief rules for partnership transfers
- FA 2003 Schedule 15 para 27A — group relief for connected companies in partnerships
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 an example only. A real result depends on the partnership agreement, ownership records, group structure, property value and any arrangements.
- The bundled legislation is current only to 17 November 2025. Current primary legislation must be checked for a transaction after that date.
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 transfer documents and the date the transfer takes effect
- The partnership agreement and each partner’s share after the transfer
- Group charts, share rights and entitlement to profits and assets
- Evidence of the property’s market value
- Details of planned sales, restructures or changes in group control
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 SDLT group relief when a company transfers property to a partnership [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 62 - claims for schedule 7 relief in returns https://www.legislation.gov.uk/ukpga/2003/14/section/62/2025-11-17 - FA 2003 section 104 - applies partnership rules to stamp duty land tax https://www.legislation.gov.uk/ukpga/2003/14/section/104/2025-11-17 - FA 2003 Schedule 7 para 1 - basic group relief and 75% group test https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/1/2025-11-17 - FA 2003 Schedule 7 para 2 - restrictions and anti-avoidance conditions for group relief https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/2/2025-11-17 - FA 2003 Schedule 7 para 3 - when group relief can later be withdrawn https://www.legislation.gov.uk/ukpga/2003/14/schedule/7/paragraph/3/2025-11-17 - FA 2003 Schedule 15 para 2 - treatment of partnerships and their partners https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/2/2025-11-17 - FA 2003 Schedule 15 para 10 - value-based calculation for property transferred to partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/10/2025-11-17 - FA 2003 Schedule 15 para 12 - five steps for working out retained shares https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/12/2025-11-17 - FA 2003 Schedule 15 para 27 - modified group relief rules for partnership transfers https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/27/2025-11-17 - FA 2003 Schedule 15 para 27A - group relief for connected companies in partnerships https://www.legislation.gov.uk/ukpga/2003/14/schedule/15/paragraph/27A/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/sdltm34365 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 an example only. A real result depends on the partnership agreement, ownership records, group structure, property value and any arrangements. - The bundled legislation is current only to 17 November 2025. Current primary legislation must be checked for a transaction after that date. 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: SDLT group relief when a company transfers property to a partnership
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