Guide on Group Relief for SDLT in Partnership Transfers

SDLT group relief on land transferred from a partnership to a group company

When land is transferred from a partnership to a company, you must first work out any SDLT charge under the special partnership rules in Schedule 15. Only after that should you consider whether group relief under Schedule 7 can reduce or remove the part of the charge that is treated as passing between companies in the same group.

• The transaction is not treated first as a normal company-to-company transfer, because the partnership rules take priority.
• Under Schedule 15, the charge is based on the part of the property that is effectively moving from another partner’s economic interest, rather than always on the full market value.
• In the example, B Ltd and C Ltd each hold a 50% partnership share, the land is transferred to B Ltd, and the chargeable consideration is 50% of market value.
• HMRC treats this in substance as B Ltd acquiring C Ltd’s 50% economic interest through the partnership structure.
• Group relief may then apply to that charge if the companies meet the Schedule 7 paragraph 2 group conditions at the relevant time.
• The main practical point is to analyse the partnership calculation first and only then check whether group relief is available.

Scroll down for the full analysis.

SDLT group relief where land is transferred from a partnership to a group company

This page explains how group relief can still matter when land is transferred out of a partnership, even though the SDLT charge is first worked out under the special partnership rules. The key point is that you do not start with an ordinary company-to-company transfer. You first calculate the charge under Schedule 15, and then consider whether group relief under Schedule 7 can reduce or eliminate the part of the charge that is treated, in substance, as a transfer between group companies.

What this rule is about

Transfers of land involving partnerships have their own SDLT rules. Those rules can produce a charge even where, looking at the transaction commercially, one of the parties already had an indirect interest in the land through the partnership.

The HMRC material here deals with a common question: if land moves from a partnership to a company that is already in the same corporate group as another partner, can group relief apply?

The answer in the example is yes, but only after working through the partnership rules properly. The legislation first asks what part of the land transfer is effectively moving value between different economic owners. Once that is identified, group relief may apply if the companies involved satisfy the group relief conditions.

What the official source says

The source considers a transfer of a chargeable interest from a partnership to B Ltd. The transaction is within the partnership provisions, so the SDLT charge is calculated under paragraph 18 and paragraph 20 of Schedule 15.

The HMRC analysis follows the standard Schedule 15 method:

• Identify the relevant owner. Here, B Ltd is a relevant owner because immediately after the transfer it owns a share of the land, and immediately before the transfer it was a partner.
• Identify the corresponding partner or partners for that relevant owner. Here, B Ltd is its own corresponding partner because it was the relevant owner and was also a partner immediately before the transfer.
• Work out what proportion of the land is attributed to that corresponding partner after the transfer. In the example, B Ltd owns 100% of the land after the transfer.
• Compare that figure with the partner’s partnership share and take the lower proportion. In the example, B Ltd’s attributed land share is 100%, but its partnership share is 50%, so the lower proportion is 50%.
• Add the lower proportions together. Here there is only one, so the sum of the lower proportions is 50%.

The chargeable consideration is then worked out as market value multiplied by 100% minus the sum of the lower proportions. In the example, that gives a charge on 50% of market value.

HMRC then explains the result in practical terms: by looking through the partnership under paragraph 2(1), the transaction is treated as if B Ltd and C Ltd had owned the property through the partnership and B Ltd has effectively acquired C Ltd’s 50% interest.

Because B Ltd and C Ltd are both 100% subsidiaries of A Ltd, HMRC says Schedule 7 group relief can apply, provided the conditions in Schedule 7 paragraph 2 are met.

What this means in practice

The practical message is that a transfer out of a partnership is not automatically exempt just because the transferee company was already a partner, or because all the companies sit in the same group.

You must separate two questions:

1. What SDLT charge arises under the partnership rules?
2. Once that charge is identified, is any relief available, such as group relief?

In the example, B Ltd already had an economic stake in the land through the partnership. That is why the Schedule 15 calculation does not charge SDLT on the whole market value. Instead, only the part treated as moving from another economic owner is charged.

That other economic owner is, in substance, C Ltd. If B Ltd and C Ltd are in the same SDLT group, group relief may relieve that charge.

So the partnership rules do not prevent group relief from applying. But they do determine what the charge is that group relief is being asked to relieve.

How to analyse it

When looking at a transfer of land from a partnership to a company, it helps to ask these questions in order:

1. Is this a land transaction involving a partnership, so that Schedule 15 applies?
2. Who is the relevant owner immediately after the transaction?
3. Who are the corresponding partners for that relevant owner under the Schedule 15 rules?
4. What proportion of the land is attributed to each corresponding partner after the transfer?
5. For each corresponding partner, what is lower: that attributed land proportion or that partner’s partnership share?
6. Add those lower proportions together to find the sum of lower proportions.
7. Apply the Schedule 15 formula to determine the chargeable consideration, usually by reference to market value.
8. Then ask whether any relief applies to the charge identified, including group relief.

For group relief specifically, the source only states that it can apply if the Schedule 7 paragraph 2 requirements are met. So the next step is not to assume relief automatically applies, but to check that the companies involved satisfy the statutory group conditions at the relevant time.

Example

Illustration based on the source material:

A partnership owns land. Its partners are B Ltd and C Ltd, each with a 50% partnership share. The land is transferred from the partnership to B Ltd alone.

After the transfer, B Ltd owns 100% of the land. Under the Schedule 15 method used in the source:

• B Ltd is the relevant owner.
• B Ltd is also the corresponding partner.
• B Ltd’s attributed share of the land after the transfer is 100%.
• Its partnership share is 50%.
• The lower proportion is therefore 50%.
• The sum of lower proportions is 50%.

The chargeable consideration is therefore 50% of market value.

In substance, the transaction is treated as B Ltd acquiring C Ltd’s 50% economic interest in the property. If B Ltd and C Ltd are both 100% subsidiaries of the same parent and the statutory conditions for group relief are met, that charge may be relieved.

Why this can be difficult in practice

The difficult part is that the legal transfer is from the partnership, but the SDLT analysis looks through the partnership to the partners’ economic interests. That can feel counterintuitive if you are used to ordinary transfers between companies.

There are also some technical points that need care:

• The partnership calculation comes first. You should not jump straight to group relief without first establishing the charge under Schedule 15.
• The identity of the relevant owner and corresponding partner matters. A wrong step there can change the charge.
• The source notes that C Ltd cannot be a corresponding partner in the particular step being applied because it is not an individual. That reflects the technical structure of the Schedule 15 test being used in this example and needs to be handled carefully in the context of the exact statutory wording.
• Group relief is not described as automatic. HMRC’s point is that it will apply only if the Schedule 7 paragraph 2 requirements are met.

So the main risk in practice is treating this as either fully exempt or fully taxable without working through both sets of rules in the right order.

Key takeaways

• A transfer of land from a partnership to a company must first be analysed under the special partnership rules in Schedule 15.
• The SDLT charge is based on the part of the land that is effectively moving from other partners’ economic interests, not necessarily the whole market value.
• Once that charge has been identified, group relief may apply if the companies satisfy the statutory group relief conditions.

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 for SDLT in Partnership Transfers

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