Guide to Group Relief and SDLT Liability in Partnership Transfers

SDLT group relief for land transferred into a partnership

When a company transfers land into a partnership, SDLT is calculated under special partnership rules rather than the usual transfer rules. Group relief under paragraph 27A can reduce or remove the SDLT charge if another partner is a connected company in the same group, but this is not automatic and must be claimed in the land transaction return.

• Paragraph 27A can treat a connected group company partner as a “corresponding partner”, which can improve the SDLT calculation.
• The key calculation is the sum of the lower proportions (SLP): the higher the SLP, the lower the chargeable consideration, and if it reaches 100 there is no chargeable consideration.
• In HMRC’s example, B Ltd transfers land to a partnership where B Ltd and C Ltd each hold 50%, and because C Ltd is connected and in the same group, the SLP becomes 100.
• Without paragraph 27A, only the transferor would count as a corresponding partner, so SDLT would be charged on part of the market value instead.
• The relief operates as a form of group relief, so a claim must be made in the SDLT return and the usual group relief conditions still need to be checked, with some modifications.
• In practice, you should confirm who owned the land before the transfer, who the partners are after it, whether any partners are connected group companies, and how the partnership shares affect the SLP calculation.

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SDLT group relief on a transfer of land into a partnership

This page explains how group relief can reduce or eliminate SDLT when a company transfers land to a partnership and connected group companies are partners. The point matters because transfers into partnerships are not taxed in the same way as ordinary land transfers. In some cases, the rules treat a connected group company as if it helps preserve the transferor’s economic interest, which can reduce the SDLT charge. But that reduction is not automatic: a group relief claim is needed, and the normal group relief conditions still matter.

What this rule is about

When land is transferred into a partnership, SDLT is worked out under special partnership rules rather than by looking only at the stated consideration. Broadly, those rules ask how much of the land has really moved away from the transferor and how much remains, directly or indirectly, within the partnership interests of the transferor and certain others.

The HMRC material here deals with a narrow but important point: where the transferor company is in the same group as another company that is also a partner, paragraph 27A can improve the SDLT result. It does this by allowing that connected group company to be treated as a “corresponding partner” for the partnership calculation.

In practical terms, that can increase the “sum of the lower proportions” or SLP. A higher SLP means less chargeable consideration under the partnership rules. If the SLP reaches 100, there is no chargeable consideration for the transfer.

What the official source says

The source considers a transfer of a chargeable interest from B Ltd to a partnership. Because the transaction is a transfer to a partnership, HMRC says the partnership provisions apply and the SDLT position must be worked out using the relevant partnership paragraphs, including paragraph 27A.

HMRC’s example applies the standard step-by-step partnership method:

• First, identify the “relevant owner”. B Ltd is the relevant owner because it owned the whole interest immediately before the transfer and was a partner immediately after it.
• Second, identify the “corresponding partners”. B Ltd is one, because it is both the relevant owner and a partner immediately after the transaction.
• HMRC then says C Ltd is also a corresponding partner because it is connected with B Ltd, is in the same group, and is a partner immediately after the transaction. That treatment depends on paragraph 27A.
• Third, the relevant owner’s pre-transaction interest is apportioned between the corresponding partners. In the example, B Ltd’s 100% interest is split 50:50 between B Ltd and C Ltd, because that gives the most beneficial result.
• Fourth, for each corresponding partner, compare the proportion attributed at step three with that partner’s partnership share. The lower figure is used. In the example, both are 50.
• Fifth, add those lower proportions together. Here, 50 + 50 = 100.

Because the SLP is 100, HMRC says there is no chargeable consideration for the transfer.

The source then explains why paragraph 27A matters. Without it, C Ltd would not count as a corresponding partner, the SLP would have been only 50, and SDLT would have been charged on 50% of the market value of the chargeable interest. With paragraph 27A, that charge is reduced so that the result matches the position as if C Ltd were a corresponding partner.

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

What this means in practice

The practical message is that a transfer into a partnership can still attract SDLT even where the land remains economically within the same corporate group. But paragraph 27A may reduce that charge if the structure fits the rule.

The key effect of paragraph 27A is not that it disapplies the partnership rules. Instead, it changes the partnership calculation by expanding who can count as a corresponding partner. That can increase the SLP and reduce the chargeable consideration.

In HMRC’s example, the difference is stark:

• Without paragraph 27A, only B Ltd counts. The SLP is 50, so SDLT is charged by reference to 50% of market value.
• With paragraph 27A, C Ltd also counts. The SLP becomes 100, so there is no chargeable consideration.

This shows that the issue is not simply whether the transferor remains a partner. The identity of the other partners, and whether they are connected group companies, can materially change the SDLT outcome.

It also shows that the beneficial apportionment at step three can matter. HMRC’s example expressly says the apportionment can be done in the way that gives the best result. That is an important practical feature of the calculation.

However, the reduction under paragraph 27A is treated as group relief. So even if the partnership calculation produces a lower charge, the relief aspect still has to be claimed in the return and still has to satisfy the group relief conditions, as modified.

How to analyse it

If you are reviewing a transfer of land from a company into a partnership, a sensible approach is:

• Confirm that this is a transfer to a partnership, so the special partnership SDLT provisions apply.
• Identify the relevant owner immediately before the transaction.
• Check who is a partner immediately after the transaction.
• Ask whether any partner is connected with the relevant owner and in the same group, so that paragraph 27A may allow that partner to be treated as a corresponding partner.
• Work through the statutory steps for the SLP calculation.
• Consider how the relevant owner’s pre-transaction interest should be apportioned among the corresponding partners. HMRC’s example indicates this can be done in the most beneficial way.
• Compare, for each corresponding partner, the attributed proportion with the partnership share, and use the lower amount.
• Add those lower amounts together to reach the SLP.
• Then ask whether any reduction produced by paragraph 27A requires a group relief claim in the land transaction return.
• Finally, check whether the usual group relief conditions are met, bearing in mind that paragraph 27A modifies them in some respects.

The most important practical questions are:

• Who owned the land immediately before the transfer?
• Who are the partners immediately after?
• Which partners are connected group companies?
• What are the partnership shares?
• Does the return include the necessary group relief claim?

Example

This is an illustration based on the HMRC example.

B Ltd owns a property outright. It transfers that property to a partnership of which B Ltd and C Ltd are each 50% partners immediately after the transfer. C Ltd is connected with B Ltd and is in the same group.

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

B Ltd’s 100% pre-transfer interest can then be apportioned between B Ltd and C Ltd. If it is split 50:50, and each company’s partnership share is also 50%, the lower proportion for each is 50. Adding them together gives an SLP of 100.

On HMRC’s analysis, 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 SDLT would be charged on 50% of the market value.

Why this can be difficult in practice

The official material is concise and assumes familiarity with the partnership code. In practice, several points can cause difficulty.

First, the result depends on multiple linked provisions. Paragraph 27A does not stand alone. You still need to work through the partnership charging rules and the SLP methodology correctly.

Second, the status of a person as a connected company in the same group is legally important. If that condition is not met, the more favourable treatment may not be available.

Third, the need for a claim can be overlooked. HMRC’s position is that paragraph 27A operates as a form of group relief, so the reduction is not merely a mechanical computational point. The return must include a group relief claim.

Fourth, HMRC says the normal group relief conditions apply, subject to modifications. That means the wider Schedule 7 framework still matters. The source page does not set out those conditions in detail, so the reader must not assume that paragraph 27A alone settles the issue.

Finally, the example uses a 50:50 apportionment because it gives the most beneficial result. That suggests there may be room for choice within the statutory method, but the apportionment still needs to be supportable within the legislation.

Key takeaways

• On a transfer of land into a partnership, paragraph 27A can allow a connected group company partner to count as a corresponding partner and improve the SDLT result.
• A higher SLP reduces chargeable consideration; if the SLP is 100, there is no chargeable consideration under HMRC’s example.
• The paragraph 27A reduction is treated as group relief, so a claim in the land transaction return is needed and the usual group relief conditions still matter, subject to modification.

This page was last updated on 24 March 2026

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

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