Guide on Group Relief and SDLT Liability for Partnerships and Transfers

SDLT Group Relief on Land Transfers into a Partnership

When land is transferred into a partnership, SDLT is calculated under special partnership rules rather than the normal purchase rules. Paragraph 27A can reduce or remove the SDLT charge by treating a connected company in the same corporate group as a corresponding partner, which can increase the sum of the lower proportions (SLP). This relief is not automatic, and a valid group relief claim must be made in the land transaction return.

• The SDLT charge depends on the partnership rules, including who owned the land before the transfer, who the partners are after it, and how much economic ownership remains in the same hands.
• If paragraph 27A applies, a connected company in the same group may be treated as a corresponding partner, which can increase the SLP and reduce the chargeable consideration.
• Where the SLP reaches 100, the chargeable consideration is nil, so no SDLT is payable under the partnership calculation.
• In HMRC’s example, B Ltd transferred land to an LLP with B Ltd and C Ltd as 50:50 partners; because C Ltd counted under paragraph 27A, the SLP was 100 and no SDLT arose.
• Without paragraph 27A, only B Ltd would count as a corresponding partner, the SLP would be 50, and SDLT would be based on 50% of the market value.
• Relief depends on meeting the statutory conditions and making a group relief claim in the land transaction return, as the usual Schedule 7 group relief rules still need to be checked.

Scroll down for the full analysis.

SDLT group relief on a transfer of land into a partnership: how paragraph 27A can reduce the charge

This page explains how group relief can affect SDLT when land is transferred into a partnership. The rule is technical because transfers involving partnerships are not taxed in the same way as ordinary land transfers. The HMRC material shows how a connected company in the same group may be treated as a “corresponding partner”, which can reduce or eliminate the SDLT charge. The point matters because the result can be very different depending on whether paragraph 27A applies and whether a valid group relief claim is made.

What this rule is about

When land is transferred to a partnership, SDLT is not worked out simply by looking at the price paid. Special partnership rules apply. Those rules broadly look at who owned the land before the transfer, who the partners are after the transfer, and how much of the economic interest in the land has effectively stayed within the same hands.

One key concept is the sum of the lower proportions, often shortened to SLP. In broad terms, the higher the SLP, the lower the chargeable consideration under the partnership rules. If the SLP is 100, there is no chargeable consideration under those rules.

The HMRC example deals with a situation where a company transfers land into a partnership and another group company is also a partner. Paragraph 27A can treat that connected group company as a corresponding partner, which may increase the SLP and reduce the SDLT charge.

What the official source says

The source starts with a transfer of a chargeable interest from B Ltd to an LLP. Because this is a transfer to a partnership, the SDLT position must be worked out under the partnership provisions, including paragraphs 10, 12 and 27A.

The HMRC analysis follows these steps:

• B Ltd is a relevant owner because it owned the chargeable interest immediately before the transfer and was a partner immediately after it.
• B Ltd is a corresponding partner in its own right.
• C Ltd is also treated as a corresponding partner because it is connected with B Ltd, is in the same group, and paragraph 27A applies.
• B Ltd owned 100% of the land before the transfer. Because there are two corresponding partners, that 100% can be apportioned between them in the way that gives the most beneficial result. In HMRC’s example, it is split 50:50.
• For each corresponding partner, the lower proportion is the lower of the proportion attributed at the earlier step and that partner’s partnership share. In the example, both figures are 50 for each company, so each lower proportion is 50.
• Adding the lower proportions gives an SLP of 100.
• Because the SLP is 100, there is no chargeable consideration for the transfer.

The source then explains the significance of paragraph 27A. Without it, C Ltd would not count as a corresponding partner. The SLP would then be only 50, and SDLT would be charged by reference to 50% of the market value of the land interest. With paragraph 27A, that charge is reduced so that the result is the same as if C Ltd had been a corresponding partner all along.

HMRC also states that paragraph 27A operates as a form of group relief. That means a claim for group relief must be made in the land transaction return for the reduction in charge. The claim is subject to the usual group relief conditions in Schedule 7 paragraph 2, although paragraph 27A modifies those conditions in some respects.

What this means in practice

The practical effect is that a transfer of land into a partnership may attract less SDLT, or none at all, where the economic ownership remains within a corporate group and the statutory conditions are met.

But this is not automatic just because the companies are connected. Several things must line up:

• the transaction must fall within the partnership transfer rules;
• there must be a relevant owner;
• the company said to benefit from paragraph 27A must be a connected company in the same group and a partner immediately after the transfer;
• the figures must be worked through under the statutory steps; and
• a group relief claim must be made in the land transaction return for the reduction in charge.

The HMRC example is important because it shows that paragraph 27A does not replace the partnership calculation. Instead, it alters who can count as a corresponding partner for that calculation. That can increase the SLP. If the SLP rises to 100, the deemed chargeable consideration falls to nil.

It also shows that, where an apportionment is possible between corresponding partners, the legislation allows it to be done in the way that gives the most beneficial result in the example given by HMRC.

How to analyse it

A sensible way to approach a case like this is:

• Confirm that this is a transfer of a chargeable interest to a partnership, so the partnership SDLT rules apply.
• Identify the relevant owner or owners: who held the land immediately before the transaction and is a partner immediately after it?
• Identify the corresponding partner or partners. Start with the obvious case, where the relevant owner itself is a partner. Then consider whether paragraph 27A brings in any connected company in the same group as an additional corresponding partner.
• Work out the proportion of the land interest held immediately before the transaction.
• If there is more than one corresponding partner, consider how that proportion may be apportioned between them under the statutory method.
• For each corresponding partner, compare the attributed land proportion with that partner’s partnership share, and take the lower figure.
• Add those lower figures together to arrive at the SLP.
• Use that SLP to determine the chargeable consideration under the partnership rules.
• If paragraph 27A is being relied on, check whether a group relief claim is required and whether the usual group relief conditions, as modified, are satisfied.

The key practical question is often this: if the connected group company is ignored, what SDLT charge would arise, and how much does paragraph 27A reduce it by?

Example

Illustration based on the HMRC example:

B Ltd owns 100% of a property. It transfers the property to an LLP. Immediately after the transfer, the LLP has two partners: B Ltd and C Ltd. C Ltd is connected with B Ltd and both are in the same group.

Under the partnership rules, B Ltd is a relevant owner. B Ltd is also a corresponding partner. Because paragraph 27A applies, C Ltd is also treated as a corresponding partner.

The 100% pre-transfer ownership can be apportioned between B Ltd and C Ltd. In HMRC’s example, this is done 50:50. Each company also has a 50% partnership share. So the lower proportion for each is 50. Adding them together gives an SLP of 100.

That means there is no chargeable consideration for the transfer.

If paragraph 27A did not apply, only B Ltd would count as a corresponding partner. The SLP would then be 50, and the chargeable consideration would be based on 50% of the market value of the property interest.

Why this can be difficult in practice

The rules are highly mechanical, but the hard part is often deciding who falls into each category and whether the group relief conditions are actually met.

In particular:

• The partnership rules use defined concepts such as relevant owner, corresponding partner and partnership share. These need to be applied carefully to the facts at the relevant times.
• Paragraph 27A does not simply exempt the transaction. It reduces the charge by treating a connected group company as a corresponding partner for the calculation. That distinction matters.
• The source says a claim for group relief is needed in the land transaction return. So even if the computation supports a reduction, the procedural step of claiming relief still matters.
• The claim is subject to the usual group relief conditions, with modifications. The HMRC page does not set out those conditions in full, so the wider Schedule 7 rules still need to be checked.
• The example uses a 50:50 apportionment because it gives the most beneficial result. In real cases, the available apportionment and the resulting figures may need closer analysis.

So although the HMRC example reaches a nil charge, that outcome depends on the exact ownership, partnership shares, group relationship, and a valid relief claim.

Key takeaways

• On a transfer of land into a partnership, SDLT is worked out under special partnership rules, not ordinary purchase rules.
• Paragraph 27A can reduce the SDLT charge by treating a connected company in the same group as a corresponding partner.
• The reduction is a form of group relief, so a claim must be made and the group relief conditions must be satisfied, subject to the statutory modifications.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guide on Group Relief and SDLT Liability for Partnerships and Transfers

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