Guidance on Charities Relief and Partnership Transactions Under FA03/Sch8 Regulations

Charities Relief for SDLT on Partnership Transactions

Charities relief can apply to Stamp Duty Land Tax partnership transactions, provided the normal Schedule 8 conditions are met. However, special limits apply where the transaction falls under paragraph 14 or paragraph 17 of the SDLT partnership rules, especially for property investment partnerships.

• Charities relief is not automatically blocked just because land is held or transferred through a partnership.
• You must first check whether the transaction is taxed under the SDLT partnership rules and whether the usual charities relief conditions are satisfied.
• If paragraph 14 or paragraph 17 applies, extra partnership-specific conditions must also be considered.
• For paragraph 14, the transferee must be a charity and all chargeable interests held by the partnership immediately after the transfer must be held for qualifying charitable purposes.
• This test looks at all partnership land after the transfer, not just the property most directly involved in the transaction.
• Paragraph 17 may also restrict the relief, so the detailed legislation should be checked if that rule might apply.

Scroll down for the full analysis.

Charities relief for SDLT on partnership transactions

This page explains how charities relief can apply when land is held or transferred through a partnership for Stamp Duty Land Tax purposes. The main point is that the normal charities relief rules can apply to partnership transactions, but there are important limits where the special SDLT partnership rules in paragraph 14 or paragraph 17 apply.

What this rule is about

SDLT has special rules for partnerships. Those rules can charge tax not only on a straightforward transfer of land into or out of a partnership, but also on certain changes in partnership interests where land is held by the partnership.

Charities relief is a separate relief under Schedule 8 to Finance Act 2003. Broadly, where its conditions are met, it can reduce or remove SDLT on a land transaction involving a charity.

The issue addressed here is how those two sets of rules interact. In other words: if a partnership transaction would otherwise be chargeable to SDLT, can charities relief apply?

What the official source says

The official material says that where the conditions for charities relief under Schedule 8 are met, the relief applies to partnership transactions generally.

It then adds an important qualification. That general position is modified where either of these special partnership provisions applies:

• paragraph 14, which deals with a transfer of an interest in a property investment partnership, or
• paragraph 17, which deals with a transfer of a partnership interest pursuant to earlier arrangements.

For paragraph 14 specifically, the source says that:

• the transferee must be a charity, and
• every chargeable interest held as partnership property immediately after the transfer must be held for qualifying charitable purposes.

That requirement comes from paragraph 28(2) and (3) of the partnership provisions.

What this means in practice

The starting point is favourable to charities. If a transaction falls within the SDLT partnership code, charities relief is not automatically excluded just because a partnership is involved.

But if the transaction is one of the special cases covered by paragraph 14 or paragraph 17, you cannot stop at the general charities relief conditions. You must also check the extra partnership-specific conditions.

For paragraph 14 transactions, the rule is strict. It is not enough that the incoming person is a charity. After the transfer, every chargeable interest that is partnership property must be held for qualifying charitable purposes. If some partnership land is not held for those purposes, the relief position may fail or be restricted under the special rule.

This matters particularly for property investment partnerships. A charity may be acquiring an interest in a partnership that owns several properties. The test looks at every chargeable interest held as partnership property immediately after the transfer, not just the specific property the charity is most concerned with.

How to analyse it

A sensible way to approach the issue is:

• Identify whether the transaction is being taxed under the SDLT partnership rules rather than as an ordinary land transfer.
• Check whether the basic conditions for charities relief under Schedule 8 are met.
• Ask whether the transaction falls within paragraph 14 or paragraph 17 of the partnership code.
• If paragraph 14 applies, confirm that the transferee is a charity.
• Then examine all chargeable interests held by the partnership immediately after the transfer.
• Consider whether each of those interests is held for qualifying charitable purposes.

The key practical question is often wider than the immediate transaction: what land does the partnership hold after the transfer, and for what purposes is it held?

Example

Illustration: a charity acquires an interest in a property investment partnership. The partnership owns several chargeable interests in land. If, immediately after the transfer, all of those interests are held for qualifying charitable purposes, the special condition mentioned in the source is capable of being satisfied. If one of those properties is held for a non-qualifying purpose, the position is more problematic because the rule refers to every chargeable interest held as partnership property.

Why this can be difficult in practice

The official text is brief, but the practical application can be fact-sensitive.

First, it may not always be obvious whether the transaction falls within paragraph 14 or paragraph 17. That classification matters because the general statement that charities relief applies to partnership transactions is expressly modified for those provisions.

Second, for paragraph 14, the test is framed by reference to all partnership property immediately after the transfer. That can create difficulties where a partnership holds multiple properties or where the purposes for which property is held are mixed or changing.

Third, the source refers to “qualifying charitable purposes”, which is a term drawn from the charities relief legislation. Applying that concept may require careful attention to the use and purpose of the land, not simply the status of the charity.

Finally, the source says that paragraph 17 also modifies the general position, but it does not set out the detailed effect on this page. So if paragraph 17 may apply, you need to look at the specific legislative rule rather than assuming the ordinary charities relief analysis is enough.

Key takeaways

• Charities relief can apply to SDLT partnership transactions if the Schedule 8 conditions are met.
• That general rule is modified where paragraph 14 or paragraph 17 of the partnership code applies.
• For paragraph 14, the transferee must be a charity and every chargeable interest held by the partnership immediately after the transfer must be held for qualifying charitable purposes.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Charities Relief and Partnership Transactions Under FA03/Sch8 Regulations

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