Guide on Partnership Transfers and Exemptions for Connected Companies in UK Tax Law

SDLT group relief on transfers from a corporate partnership

When land is transferred from a partnership made up only of companies to another connected company, the special SDLT partnership rules usually apply first. These rules can charge SDLT on the property’s market value, but group relief may still be available if the companies are in the same SDLT group and all legal conditions are met.

• The main charging rule is paragraph 18 of Schedule 15 to Finance Act 2003, which applies to certain transfers from partnerships.
• Where the partnership consists entirely of corporate partners, paragraph 24 can substitute market value as the chargeable consideration.
• This partnership rule takes priority over the general connected-company market value rule in section 53.
• Group relief is not automatically blocked just because the partnership rules and market value rule apply.
• Relief may be claimed under the SDLT group relief rules if the transferor-side companies and transferee are group companies and all statutory conditions are satisfied.
• In practice, you need to check separately which charging rule applies, what counts as consideration, and whether relief is available.

Scroll down for the full analysis.

SDLT and partnerships: when group relief can still apply to a transfer from a corporate partnership

This page explains a narrow but important SDLT point. It deals with a transfer of land from a partnership made up entirely of companies to another company connected with those partners. The basic rule is that the partnership rules can charge SDLT by reference to market value. But that is not always the end of the story. If the companies are in the same SDLT group, group relief may still be available, provided the statutory conditions are met.

What this rule is about

SDLT has special rules for partnerships in Schedule 15 to Finance Act 2003. Those rules can apply instead of the more general company transfer rules.

The source material focuses on a transfer of a chargeable interest from a partnership whose members are all companies. The land is transferred to another company that is connected with the partners. In that situation, the partnership provisions are engaged, and they can produce a charge based on market value rather than the actual price paid.

The key issue is whether any relief can reduce or eliminate that charge. HMRC’s view in the source material is that group relief may still be claimed where the companies fall within the SDLT group relief rules and all conditions are satisfied.

What the official source says

The official material describes this fact pattern:

• a partnership holds a chargeable interest,
• the partnership consists entirely of bodies corporate, and
• the interest is transferred to another company connected with the partners.

HMRC says the transaction is charged under paragraph 18 of Schedule 15. Because of paragraph 24, where the partnership consists wholly of companies, the chargeable consideration is the market value of the interest transferred.

The source also notes that the transfer would also be caught by section 53 of Finance Act 2003, but that paragraph 18 takes priority. In other words, where the partnership code applies, you work under that code rather than under the general connected-company market value rule.

HMRC then states that if the transferor-side companies and the transferee company are group companies for the purposes of Schedule 7 to Finance Act 2003, paragraphs 27 and 27A of Schedule 15 apply, so group relief can be claimed if all the relevant conditions are met.

What this means in practice

The practical effect is a two-stage analysis.

First, you do not ignore the partnership rules just because the parties are companies. If land is transferred out of a partnership made up entirely of corporate partners, the special partnership charging rules can apply. Under those rules, market value may be treated as the consideration, even if little or nothing is actually paid.

Second, the existence of a market value charge does not automatically prevent relief. If the companies are in the same SDLT group and the statutory requirements for group relief are met, relief may still be available.

This matters because a transfer from a corporate partnership to a group company may look like an internal reorganisation. Without relief, SDLT could be charged on full market value. With relief, the charge may be reduced or eliminated, depending on the legislation and whether all conditions are satisfied.

The source material does not say that group relief always applies. It says it can be claimed if all conditions are met. That is an important distinction. You must still test the transaction against the group relief rules and any specific partnership-related provisions that modify how relief works.

How to analyse it

A sensible way to approach this kind of transaction is to ask the following questions.

• Is there a transfer of a chargeable interest from a partnership?
• Does the partnership consist wholly of bodies corporate?
• Is the transferee a company connected with the partners?
• Does paragraph 18 of Schedule 15 apply so that the partnership code governs the charge?
• Because the partnership is wholly corporate, does paragraph 24 substitute market value as the chargeable consideration?
• Are the relevant companies group companies for the purposes of Schedule 7 to Finance Act 2003?
• If so, are all conditions for group relief actually met?
• Do paragraphs 27 and 27A of Schedule 15 affect how the relief applies in the partnership context?

This framework helps keep separate three different issues that are easy to blur together:

• which charging rule applies,
• what amount counts as consideration, and
• whether a relief is then available.

The source material is clear that the charging rule comes from the partnership provisions, not from section 53, even though section 53 would otherwise also be relevant.

Example

Illustration only.

A partnership owns a property. The only partners are Company B and Company C. The property is transferred from the partnership to Company D. Company D is connected with B and C, and all three companies are members of the same SDLT group.

On HMRC’s approach in the source material, the transaction is charged under paragraph 18 of Schedule 15. Because the partnership is made up entirely of companies, paragraph 24 means the chargeable consideration is the market value of the property, not simply any amount Company D pays.

However, if B, C and D are group companies for Schedule 7 purposes, and the other statutory requirements are met, group relief may be claimed under the provisions identified by HMRC. So the transaction is not excluded from relief merely because the partnership rules and market value rule apply first.

Why this can be difficult in practice

The difficulty is that several SDLT rules overlap.

A reader might assume that a connected-company transfer should simply be tested under the general market value rule in section 53. The source material says that is not the right starting point here. The partnership rule in paragraph 18 takes priority.

There can also be a tendency to think that if market value is substituted as consideration, relief is no longer possible. The source material shows that this is too simplistic. The charge may be computed under the partnership code, and relief may still be available afterwards if the statutory requirements are met.

The most fact-sensitive part is usually whether the companies are group companies for Schedule 7 purposes and whether all conditions for group relief are satisfied. The source material does not restate those conditions, so this page cannot treat them as automatic. It simply explains that the possibility of relief remains open.

Key takeaways

• A transfer of land from a partnership made up entirely of companies can be charged under the special partnership rules, with market value treated as the consideration.
• Even if the transaction is also within the general connected-company rule, the partnership provision takes priority on HMRC’s view.
• Group relief may still be claimed if the companies are within the SDLT group relief rules and all statutory conditions are met.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Partnership Transfers and Exemptions for Connected Companies in UK Tax Law

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