Guide on 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 normal sale rules. In some cases, paragraph 27A allows another connected company in the same group to be treated as a corresponding partner, which can increase the relieving proportion and reduce or even remove the SDLT charge, but a group relief claim must be made in the land transaction return.

• The rules apply where land is transferred to a partnership and the former owner, or a connected group company, is a partner after the transfer.
• Paragraph 27A can treat a connected company in the same group as an extra corresponding partner, which may increase the sum of lower proportions in the partnership calculation.
• In HMRC’s example, this changed the SDLT result from a charge based on 50% of market value to no charge at all.
• The calculation depends on identifying the relevant owner, identifying all corresponding partners, apportioning the former owner’s interest, and comparing that with each partner’s partnership share.
• This is treated as a form of group relief, so the normal group relief conditions still apply, with some modifications, and relief is not automatic.
• Real cases can be more complex where ownership shares, partnership shares, or group connections do not line up neatly.

Scroll down for the full analysis.

SDLT group relief when land is transferred into a partnership

This page explains how group relief can reduce or eliminate SDLT when a company transfers land into a partnership and another group company is also a partner. The underlying rules are technical because transfers to partnerships are not taxed in the same way as ordinary land transfers. The key point is that, in some cases, a connected group company can be treated as a “corresponding partner”, which increases the partnership relief calculation and reduces the SDLT charge.

What this rule is about

When land is transferred to a partnership, SDLT is not worked out simply by asking what price was paid. Instead, special partnership rules apply. Those rules look at who owned the land before the transfer, who the partners are after the transfer, and how much of the partnership is effectively held by people connected with the former owner.

The page you have provided deals with one particular feature of those rules: paragraph 27A. In broad terms, paragraph 27A can extend the normal partnership calculation by treating a connected company in the same group as a “corresponding partner”. That matters because it can increase the proportion of the transfer that is ignored for SDLT purposes.

This is described by HMRC as a form of group relief. It does not replace the partnership rules. Instead, it modifies their effect in a case where a company transfers a chargeable interest to a partnership and another connected group company is also a partner.

What the official source says

The source assumes there is a transfer of a chargeable interest from B Ltd to a Scottish limited partnership. Because the transfer is to a partnership, the SDLT liability must be worked out under the partnership provisions, including the steps that calculate the sum of lower proportions.

HMRC’s example applies the calculation in five steps:

• First, identify the relevant owner. Here, B Ltd is the relevant owner because it owned the whole chargeable interest immediately before the transfer and is a partner immediately after it.
• Second, identify the corresponding partner or partners. B Ltd is one corresponding partner because it is both the former owner and a partner after the transfer.
• Because C Ltd is connected with B Ltd and is in the same group, paragraph 27A applies. HMRC therefore treats C Ltd as an additional corresponding partner.
• Third, the former owner’s 100% interest is apportioned between the corresponding partners. HMRC says this apportionment can be done in the most beneficial way. In the example, 100% is split 50:50 between B Ltd and C Ltd.
• Fourth, for each corresponding partner, compare the proportion attributed to that partner at step three with that partner’s partnership share. The lower of the two is used. In the example, both figures are 50 for each company, so the lower proportion is 50 each.
• Fifth, add the lower proportions together. Here that gives 100. HMRC says that where the sum of lower proportions is 100, there is no chargeable consideration for the transaction.

HMRC then explains the effect of paragraph 27A by comparing the result with the position if it did not apply. Without paragraph 27A, C Ltd would not count as a corresponding partner. The sum of lower proportions would then be 50, and SDLT would be charged on 50% of the market value of the land. With paragraph 27A, the sum of lower proportions becomes 100, so the charge is reduced to nil.

The source also makes two further points:

• the reduction under paragraph 27A is treated as a form of group relief; and
• a claim for group relief must be made in the land transaction return for the reduction in charge.

HMRC also says the ordinary group relief conditions apply, subject to modifications in paragraph 27A(3).

What this means in practice

The practical effect is that a transfer of land into a partnership may attract less SDLT than the basic partnership calculation would suggest, if another group company is a partner and paragraph 27A applies.

In HMRC’s example, this changes the result significantly:

• without paragraph 27A, SDLT would be charged by reference to 50% of market value; but
• with paragraph 27A, the charge is reduced so that nothing is charged.

This does not mean every transfer of land into a partnership within a group is exempt. The result depends on the detailed partnership calculation and on whether the conditions for this modified group relief are met.

It also means that the SDLT return matters. HMRC’s position is that the reduction is not automatic in the sense of needing no claim. The partnership must claim group relief in the land transaction return for the relevant reduction.

How to analyse it

A sensible way to analyse this type of case is as follows.

• Start with the partnership rules, not ordinary sale-and-purchase rules. The transfer is to a partnership, so the special partnership code applies.
• Identify the relevant owner immediately before the transfer. Usually this is the person who owned the chargeable interest and is also a partner after the transfer.
• Identify the corresponding partners. This includes the former owner if it is a partner after the transfer. Then ask whether paragraph 27A brings in any connected group company as an additional corresponding partner.
• Check the connection and group position carefully. HMRC’s example depends on C Ltd being connected with B Ltd and part of the same group.
• Apportion the former owner’s pre-transfer interest between the corresponding partners. The source says this can be done in the most beneficial way.
• 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 find the sum of lower proportions.
• Use that result to work out how much of the market value remains chargeable under the partnership rules.
• Then consider the group relief claim requirements. HMRC says paragraph 27A operates as a form of group relief, so a claim must be made and the usual group relief conditions apply, with modifications.

The key practical question is often this: does the connected group company genuinely increase the sum of lower proportions enough to reduce the SDLT charge, and has the claim been made on the correct basis?

Example

Illustration based on HMRC’s example:

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

B Ltd’s former 100% ownership can be apportioned between the two corresponding partners. If 50% is attributed to B Ltd and 50% to C Ltd, and each company’s partnership share is also 50%, the lower proportion for each is 50%.

The total is therefore 100%. On HMRC’s analysis, that means there is no chargeable consideration for SDLT purposes.

If C Ltd could not be treated as a corresponding partner, the total would only be 50%, and SDLT would instead be charged on 50% of market value.

Why this can be difficult in practice

The source is short, but the underlying rules are not. Several points can be fact-sensitive.

• Whether paragraph 27A applies at all depends on the exact connection and group relationship. Those terms must be tested under the relevant SDLT rules, not assumed from everyday language.
• The source says the step three apportionment can be carried out to give the most beneficial result. In practice, that makes the calculation important, because different apportionments may produce different SDLT outcomes.
• The relief is described as a form of group relief, but it is still operating within the partnership rules. That means the interaction between the two sets of provisions has to be handled carefully.
• HMRC says the usual group relief conditions apply, subject to modifications. That means a reader should not assume that paragraph 27A works if the normal group relief framework would otherwise fail.
• The example produces a nil charge because the figures align neatly at 50:50. Real cases may involve uneven partnership shares, multiple partners, or ownership percentages that do not match the economic deal.

So the main difficulty is not the broad idea. It is getting the statutory mechanics right.

Key takeaways

• When land is transferred into a partnership, SDLT is worked out under special partnership rules, not ordinary consideration rules.
• A connected group company may be treated as a corresponding partner under paragraph 27A, which can increase the relieving proportion and reduce the SDLT charge.
• HMRC treats this as a form of group relief, so a claim must be made in the land transaction return and the usual group relief conditions still matter, subject to 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 in Partnership Transfers

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