Understanding Group Relief and SDLT Implications for E Ltd to B Ltd Transfer

When SDLT group relief can fail because of a Scottish partnership in the ownership chain

SDLT group relief can be denied on a land transfer between two companies if a Scottish partnership or Scottish limited partnership sits in the ownership chain. HMRC’s view is that, although such a partnership has legal personality, it is not a body corporate, so it can break the statutory group test in Schedule 7. If the transfer is not to or from a partnership, the partnership rules in Schedule 15 do not apply, and SDLT may be payable in the normal way.

• Group relief only applies if the transfer is between companies that meet the statutory SDLT group conditions, including the 75% beneficial ownership test.
• For this purpose, the ownership chain must involve bodies corporate, and a Scottish partnership or Scottish limited partnership is not a body corporate.
• You cannot simply look through a Scottish partnership to its partners when testing whether the companies are in the same SDLT group.
• Schedule 15 partnership rules are only relevant if the actual land transfer is from or to a partnership, not just because a partnership appears elsewhere in the structure.
• A transfer that looks like an internal group reorganisation in commercial terms may still fail for SDLT group relief if the legal ownership chain does not meet the legislation.

Scroll down for the full analysis.

Why SDLT group relief may fail where a Scottish partnership is in the ownership chain

This page explains a narrow but important SDLT point. A land transfer between two companies may look like an intra-group transfer, but group relief does not automatically apply. Where a Scottish partnership or Scottish limited partnership sits in the ownership chain, the relief can fail because the statutory group test looks for bodies corporate, and the partnership is not one.

What this rule is about

SDLT group relief can remove the SDLT charge on certain transfers of land within a corporate group. The relief is aimed at transfers between companies that are sufficiently closely connected.

The source material deals with a case where land is transferred from one company to another company, but the wider ownership structure includes a Scottish partnership or Scottish limited partnership. The question is whether that structure still counts as a qualifying group for SDLT purposes.

This matters because, if the companies are not members of the same SDLT group under the legislation, the transfer is taxed in the normal way even if, commercially, the businesses are under common control.

What the official source says

HMRC’s manual says that, in the example, the partnership rules in Schedule 15 do not apply because the transfer is not to or from a partnership. So the analysis moves straight to Schedule 7, which contains the SDLT group relief rules.

Under that analysis, the transfer must be between group companies. HMRC highlights two key points:

• the companies must satisfy the 75% beneficial ownership test; and
• the relevant entities in the ownership chain must be bodies corporate.

The manual then states that a Scottish partnership or Scottish limited partnership has its own legal personality, so you cannot simply ignore it and look through to its partners for this purpose. But it is also not a body corporate. Because of that, it cannot form part of the qualifying group structure required by Schedule 7.

HMRC’s conclusion is that group relief is not available, and SDLT is payable on the company-to-company transfer.

What this means in practice

The practical point is easy to miss. A transfer may be:

• from one company to another company, and
• within what appears to be a wider group under commercial or accounting thinking,

but still fail for SDLT group relief because the legal ownership chain does not match the statutory test.

If a Scottish partnership or Scottish limited partnership sits between the companies and the ultimate parent, HMRC’s view in this manual is that the partnership cannot be treated as a qualifying group company. Nor can you simply trace through it as if it were transparent for this purpose.

That means the transfer is treated as an ordinary chargeable land transaction unless some other relief applies.

The source also makes clear that you should not assume the partnership provisions help. Schedule 15 is only relevant where the transfer is from or to a partnership. If the actual transfer is only between companies, the mere presence of a partnership elsewhere in the structure does not bring Schedule 15 into play.

How to analyse it

A sensible way to approach this issue is:

• Identify the actual transfer. Is the land being transferred from or to a partnership, or only between companies?
• If the transfer is not from or to a partnership, do not assume the partnership SDLT rules apply.
• Consider whether group relief is being claimed under Schedule 7.
• Map the ownership chain carefully. Do not rely on informal group charts or commercial descriptions.
• Ask whether the entities that need to form the SDLT group are bodies corporate.
• Check whether the 75% beneficial ownership requirement can be met within that legally recognised corporate structure.
• If a Scottish partnership or Scottish limited partnership appears in the chain, consider whether that breaks the Schedule 7 grouping analysis.

The key discipline is to separate three questions that are often blurred together:

• who is transferring the land;
• whether the partnership rules apply; and
• whether the statutory definition of a group is actually met.

Example

Illustration: Company E transfers land to Company B. Neither party to the transfer is a partnership. However, in the wider ownership structure, a Scottish limited partnership sits between one company and the rest of the group.

At first glance, the transfer may look like an internal reorganisation. But on HMRC’s approach in this manual, the Scottish limited partnership cannot be ignored and is not a body corporate. If the 75% group relationship depends on that entity being part of the chain, Schedule 7 group relief is not available. SDLT is therefore charged on the transfer in the usual way.

Why this can be difficult in practice

This area can be awkward because different legal concepts point in different directions.

On the one hand, a Scottish partnership or Scottish limited partnership has legal personality. That may suggest it should be treated as a distinct entity in the structure. On the other hand, for SDLT group relief the legislation requires a qualifying corporate grouping, and HMRC’s point is that legal personality is not enough if the entity is not a body corporate.

The result can feel counterintuitive. A structure may operate as a group in everyday business terms, yet fail the SDLT relief conditions because the statute uses a narrower test.

Another difficulty is that advisers may instinctively look at the partnership rules whenever a partnership appears anywhere in the facts. The source material warns against that. The first question is whether the transfer itself is to or from a partnership. If it is not, Schedule 15 may simply be irrelevant.

The source material is also brief and example-driven. It gives HMRC’s conclusion on the facts presented, rather than a full exploration of every possible variant. So the exact ownership chain and the role of each entity remain important.

Key takeaways

• A company-to-company land transfer does not qualify for SDLT group relief just because it is commercially intra-group.
• If a Scottish partnership or Scottish limited partnership is part of the ownership chain, HMRC’s view is that it cannot satisfy Schedule 7’s requirement for a corporate group.
• The partnership rules in Schedule 15 do not apply unless the transfer is actually from or to a partnership.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Understanding Group Relief and SDLT Implications for E Ltd to B Ltd Transfer

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