Explaining SDLT Group Relief in Transfers to English Partnerships

SDLT group relief on transferring property into a partnership

When a company transfers land or buildings into a partnership, SDLT is calculated under special partnership rules rather than normal sale rules. If another partner is a company in the same SDLT group as the transferor, paragraph 27A can reduce the chargeable consideration by treating that group company as a corresponding partner, but the relief must be claimed and the SDLT group conditions must be met.

• The rules look at how much of the property has effectively moved away from the transferor to other partners, using market value and partnership shares.
• A connected company only helps if it is actually in the same SDLT group as the transferor; common ultimate ownership on its own is not enough.
• The transferor is the relevant owner if it owned the property before the transfer and remains a partner immediately after it.
• If paragraph 27A applies, the transferor’s pre-transfer ownership can be apportioned between the corresponding partners in the most beneficial way before comparing that split with their partnership shares.
• In HMRC’s example, this reduced the chargeable consideration from £550,000 to £200,000 on a property worth £1,000,000.
• The reduction is a form of group relief within the partnership rules, so it must be claimed in the land transaction return and is still subject to the usual group relief conditions, with modifications.

Scroll down for the full analysis.

SDLT group relief when a company transfers property into a partnership

This page explains how a special SDLT rule can reduce the tax charge when a company transfers land or buildings into a partnership and another partner is in the same SDLT group. The point matters because transfers into partnerships are not taxed in the same way as ordinary sales, and the group relief effect here works through the partnership rules in a technical way.

What this rule is about

When property is transferred into a partnership, SDLT is not worked out simply by looking at the price paid. Instead, special partnership rules apply. Broadly, those rules ask how much of the property has effectively moved away from the transferor and into the hands of other partners.

In some cases, that result can be softened where another partner is connected with the transferor and is in the same SDLT group. Paragraph 27A is the provision that does this. It treats that group company as if it were also a “corresponding partner” for the partnership calculation. That can increase the amount treated as still remaining within the transferor’s side of the group, which reduces the chargeable consideration.

The HMRC manual example deals with a transfer of a chargeable interest to an English partnership and shows how paragraph 27A interacts with the ordinary partnership calculation rules.

What the official source says

The source starts from the normal rule for a transfer into a partnership. It says that, because this is a transfer to a partnership, the SDLT liability must be established under the partnership provisions, in particular the rules referred to as paragraphs 10, 12 and 27A.

In the example:

• A Ltd transfers a warehouse worth £1,000,000 to the partnership.
• The partnership has four partners: A Ltd 45%, B Ltd 35%, C Ltd 15% and D Ltd 5%.
• A Ltd and B Ltd are connected and are in the same group for SDLT purposes.
• C Ltd is under common ultimate ownership with A Ltd and B Ltd, but is not in the same SDLT group as A Ltd.
• D Ltd is unconnected.

The manual then applies a step-by-step approach.

First, identify the relevant owner. A Ltd is the relevant owner because it owned the chargeable interest immediately before the transaction and was a partner immediately after it.

Second, identify the corresponding partner or partners. A Ltd is its own corresponding partner. B Ltd is also treated as a corresponding partner because paragraph 27A applies where it is connected with the relevant owner and part of the same group. C Ltd does not qualify just because the same individual ultimately owns both sides. The source makes the point that being under common ownership is not enough if the companies are not in the same SDLT group.

Third, apportion the relevant owner’s pre-transaction interest between the corresponding partners. A Ltd owned 100% of the warehouse before the transfer. Because there are two corresponding partners, that 100% can be apportioned between A Ltd and B Ltd in the way that gives the most beneficial result. In the example, HMRC uses a 50:50 split.

Fourth, for each corresponding partner, compare:

• the share of the chargeable interest attributed to that partner under the apportionment, and
• that partner’s partnership share.

You use the lower figure for each partner. In the example, the apportioned share is 50% each for A Ltd and B Ltd, but their partnership shares are 45% and 35%. The lower figures are therefore 45% and 35%.

Fifth, add those lower proportions together. That gives 80%. The chargeable consideration is then 20% of market value, so £200,000.

The source then contrasts this with the position if paragraph 27A did not apply. Without paragraph 27A, only A Ltd would be a corresponding partner. The relevant proportion would then be 45%, and chargeable consideration would be 55% of market value, or £550,000.

HMRC describes paragraph 27A as a form of group relief. The partnership must therefore claim group relief in its land transaction return for the reduction in charge, and the claim is subject to the usual group relief conditions, with modifications.

What this means in practice

The practical effect is that a transfer into a partnership may attract less SDLT if part of the partnership is held by another company in the same SDLT group as the transferor.

That reduction does not happen automatically just because the companies are connected in a broad commercial sense. The source is careful to distinguish between:

• companies that are connected and in the same SDLT group, and
• companies that may have common ultimate ownership but are not in the same SDLT group.

Only the first category benefits from paragraph 27A on the facts given.

The example also shows an important practical point: once paragraph 27A brings another group company into the calculation as a corresponding partner, the pre-transfer ownership can be apportioned between those corresponding partners in the most beneficial way. That can materially reduce the chargeable consideration.

But the relief operates as a reduction in the SDLT charge under the partnership rules. It is not simply a free-standing conclusion that “group relief applies”. A claim must be made in the land transaction return, and the normal group relief conditions still matter, subject to the modifications referred to in the source.

How to analyse it

A sensible way to approach this kind of case is:

1. Confirm that the transaction is a transfer of a chargeable interest to a partnership, so that the partnership rules apply.
2. Identify the relevant owner: who held the property immediately before the transfer and is a partner immediately after?
3. Identify the corresponding partners. Start with the relevant owner itself. Then ask whether paragraph 27A brings in any connected company that is also in the same SDLT group and is a partner immediately after the transaction.
4. Do not assume common ownership is enough. Check whether the companies are actually in the same SDLT group for these purposes.
5. Apportion the relevant owner’s pre-transfer interest between the corresponding partners. The source says this may be done in the way that gives the most beneficial result.
6. For each corresponding partner, compare the apportioned property share with that partner’s partnership share. Use the lower figure.
7. Add those lower figures together. That total determines how much of the market value is effectively sheltered within the relevant ownership group for the partnership calculation.
8. The balance is the chargeable consideration for SDLT purposes.
9. If paragraph 27A is being relied on, check that a group relief claim is made in the land transaction return and that the relevant group relief conditions are met.

Example

This is the HMRC example in simpler form.

A Ltd owns a warehouse worth £1,000,000 and transfers it to a partnership. After the transfer, the partnership interests are:

• A Ltd: 45%
• B Ltd: 35%
• C Ltd: 15%
• D Ltd: 5%

A Ltd and B Ltd are in the same SDLT group. C Ltd is not, even though there is common ultimate ownership.

Because paragraph 27A applies, both A Ltd and B Ltd are treated as corresponding partners. A Ltd’s 100% pre-transfer ownership can be split between them. If it is split 50:50, each has an attributed 50% share.

You then compare that 50% with each company’s partnership share:

• A Ltd: lower of 50% and 45% = 45%
• B Ltd: lower of 50% and 35% = 35%

Total = 80%.

So the chargeable consideration is 20% of the warehouse’s market value, which is £200,000.

Without paragraph 27A, only A Ltd would count. The relevant figure would then be 45%, and chargeable consideration would be 55% of market value, or £550,000.

Why this can be difficult in practice

The hardest parts are usually classification and mechanics.

First, group status is technical. A reader might assume that companies under the same ultimate owner are automatically in the same group. The source shows that this is not necessarily right for SDLT. Whether companies are in the same group must be tested under the SDLT grouping rules, not just by looking at who ultimately controls them.

Second, the partnership rules are formula-based. The result depends on identifying the correct relevant owner, the correct corresponding partners, and the correct partnership shares immediately after the transaction. A mistake in any of those steps can change the SDLT calculation significantly.

Third, the source says the apportionment between corresponding partners can be carried out to give the most beneficial result. That is helpful, but it means the calculation is not purely mechanical until you have considered the available apportionment and tested the outcome.

Finally, paragraph 27A is described as a form of group relief, but it still has to be claimed and remains subject to the usual group relief conditions, with modifications. So even if the partnership computation points towards a reduced charge, the filing position and relief conditions still need to be checked carefully.

Key takeaways

• On a transfer of property into a partnership, SDLT is worked out under special partnership rules rather than by ordinary sale principles alone.
• A company in the same SDLT group as the transferor may be treated as a corresponding partner under paragraph 27A, which can reduce the chargeable consideration.
• Common ultimate ownership is not enough by itself; the companies must satisfy the SDLT group test, and the relief must be claimed in the land transaction return.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Explaining SDLT Group Relief in Transfers to English Partnerships

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