Group Relief Inapplicable for E Ltd to B Ltd Transfer: SDLT Due

Why an LLP can block SDLT group relief

SDLT group relief for land transfers between companies only applies if the strict legal group conditions in Schedule 7 are met. Where the ownership chain includes an LLP, relief can fail because an LLP has separate legal personality but no issued share capital, so it cannot meet the normal 75% subsidiary test needed for group relief.

• If land is transferred from one company to another, and not to or from a partnership, the partnership rules in Schedule 15 do not apply.
• The transfer must be tested under Schedule 7, which requires the companies to be in the same qualifying group.
• An LLP cannot simply be ignored or looked through to its members, because it is a separate legal person.
• Although an LLP is a body corporate, it has no issued share capital, so it cannot fit the usual subsidiary conditions for SDLT group relief.
• If the group link between the two companies depends on an LLP in the chain, HMRC’s view is that group relief is not available and SDLT is payable in the normal way.

Scroll down for the full analysis.

Why SDLT group relief does not apply where an LLP sits in the ownership chain

This page explains a narrow but important SDLT point: a land transfer between two companies will not qualify for group relief if the group relationship depends on a limited liability partnership being treated as part of the corporate group. The reason is technical but practical. An LLP is a body corporate, but it has no issued share capital, so it cannot satisfy the share ownership conditions needed for SDLT group relief.

What this rule is about

SDLT group relief can remove or reduce SDLT on certain transfers of land between companies in the same group. But the relief is only available if the statutory group conditions are met.

The source material deals with a case where land is transferred from one company to another, and there is an LLP somewhere in the ownership structure. That matters because, for SDLT group relief, it is not enough that the entities are commercially connected. They must fit the specific legal definition of a group in Schedule 7.

The source also makes clear that the partnership rules in Schedule 15 are irrelevant on these facts, because the transfer is not to or from a partnership. So the question is decided solely under the group relief rules.

What the official source says

HMRC’s manual says that where there is a transfer of a chargeable interest from one company to another, and the transaction is not a transfer from or to a partnership, Schedule 15 does not apply. The analysis must therefore be made directly under Schedule 7, which contains the SDLT group relief rules.

The manual then states that, for group relief to apply:

• the transfer must be between group companies,
• a company must be a body corporate, and
• the 75% beneficial ownership test must be met.

It also says that an LLP has its own legal personality, so you cannot simply look through the LLP to its members when testing the group relationship. Although an LLP is a body corporate, it does not have issued share capital. Because of that, it cannot satisfy the Schedule 7 requirements for being a subsidiary of another company. On that basis, the transfer does not qualify for group relief, and SDLT is payable.

What this means in practice

The practical point is that an LLP can break the SDLT group relief chain.

Many business structures use LLPs for commercial or regulatory reasons. A reader might assume that, because an LLP is a separate legal person and is closely connected to the companies involved, it can be treated like any other group company. For SDLT group relief, that assumption is unsafe.

The problem is not that an LLP is ignored. It is the opposite. Because it has separate legal personality, HMRC’s view is that you must recognise it as part of the structure. But once you do that, the statutory group test fails because the Schedule 7 concept of a subsidiary depends on issued share capital and 75% beneficial ownership. An LLP has no share capital, so it cannot slot into that test in the same way as an ordinary company limited by shares.

So if company A transfers land to company B, and the argument for group relief depends on both being connected through an LLP, the relief is not available on the approach set out in the manual.

How to analyse it

A sensible way to analyse this type of case is:

• First, identify the actual transferor and transferee. Is the land being transferred by or to a partnership, or is it simply a transfer between two corporate entities?
• Second, if the transfer is not from or to a partnership, do not start with the partnership provisions. Go straight to the SDLT group relief rules in Schedule 7.
• Third, map the ownership chain carefully. Do not assume you can ignore an LLP and look through to its members.
• Fourth, ask whether the statutory 75% beneficial ownership test can be satisfied using entities that have issued share capital in the way Schedule 7 requires.
• Fifth, if the only way of showing a group relationship is by treating an LLP as if it were a normal share-capital subsidiary, the relief is likely to fail on the reasoning in the source material.

The key legal question is not whether the entities are economically linked, but whether they meet the precise statutory group definition used for SDLT relief.

Example

Illustration: Company E transfers land to Company B. The wider structure includes an LLP. The transfer is not made by the LLP and is not made to the LLP, so the partnership rules are not engaged. Company E and Company B argue that they are in the same group because they are connected through the LLP. On HMRC’s approach in the source material, that does not work. The LLP has separate legal personality, so it cannot be ignored, but it has no issued share capital, so it cannot satisfy the Schedule 7 subsidiary conditions. The result is that group relief is not available, and SDLT is charged in the normal way.

Why this can be difficult in practice

This area can be counter-intuitive. In everyday business language, an LLP may be treated as part of a wider group. But SDLT group relief uses a technical tax definition, not a loose commercial one.

The difficulty usually comes from three points:

• People may assume that because an LLP is a body corporate, it can automatically count as a group company for all SDLT purposes. The source shows that this is not enough.
• People may try to look through the LLP to its members. HMRC’s manual says that is not the right approach here because the LLP has its own legal personality.
• There can be confusion between the partnership rules and the group relief rules. The source is clear that if the transfer is not from or to a partnership, Schedule 15 is not the route to relief.

The underlying issue is that SDLT reliefs are statutory. If the structure does not fit the statutory conditions, a close economic relationship will not usually rescue the claim.

Key takeaways

• For SDLT group relief, the statutory group definition matters more than the commercial reality of the wider structure.
• An LLP has separate legal personality, so HMRC’s approach is that you cannot simply look through it to its members.
• Because an LLP has no issued share capital, it cannot satisfy the Schedule 7 subsidiary conditions in the usual way, so group relief may be unavailable.

This page was last updated on 24 March 2026

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

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