Guidance on Group Relief and Exemptions in Stamp Duty Land Tax Calculations

SDLT group relief for partnership transactions involving connected group companies

In some SDLT partnership transactions, a special rule can reduce the tax where a company is connected with, and in the same group as, a relevant owner. Normally only an individual can count as a corresponding partner in the paragraph 12 calculation, but this exception can treat the company as if it were a corresponding partner. The reduction is not automatic and must be claimed as group relief in the land transaction return, with the usual group relief conditions still satisfied.

• The rule applies to certain partnership transactions where the paragraph 12 charge and the “sum of the lower proportions” are relevant.
• Usually, only an individual can be a corresponding partner, which can increase the SDLT charge if a company is involved instead.
• If a company is both connected to a relevant owner and in the same group, the charge may be reduced to the amount that would apply if the company were treated as a corresponding partner.
• The partnership must claim group relief in the land transaction return for the reduction to apply; HMRC says code “12” should be used.
• The normal group relief conditions in Schedule 7 paragraph 2 still have to be met, even though this is a modified form of group relief.
• Care is needed because the rule depends on both the tax calculation and the relief claim being correctly analysed and filed.

Scroll down for the full analysis.

SDLT group relief where a company is treated like a corresponding partner in partnership rules

This page explains a narrow but important SDLT rule for partnership transactions. Normally, when working out the paragraph 12 charge and the “sum of the lower proportions”, only an individual can be a corresponding partner of a relevant owner. This rule creates an exception where a company is connected with, and in the same group as, a relevant owner. If the conditions are met, the SDLT charge can be reduced, but only if group relief is claimed and the usual group relief conditions are satisfied.

What this rule is about

The source material deals with the special SDLT rules for partnerships. In some partnership transactions, the tax calculation includes a Step Two exercise that looks at the “sum of the lower proportions”. That calculation can affect how much SDLT is charged.

As a starting point, the legislation generally allows only an individual to be a “corresponding partner” to a relevant owner for this purpose. That matters because if a person or entity cannot be treated as a corresponding partner, the resulting SDLT charge may be higher.

The rule covered here is one of the exceptions to that general position. It applies where a company has the right connection to a relevant owner and is part of the same group. In that situation, the legislation allows the SDLT charge to be recalculated on a more favourable basis, broadly by treating the connected company as if it had been a corresponding partner.

What the official source says

HMRC’s manual says that the general rule is that only an individual can be a corresponding partner to a relevant owner in Step Two of the paragraph 12 calculation. It then points to an exception in paragraph 27A.

Where paragraph 27A applies, and a company is both connected to and part of the same group as a relevant owner, the charge calculated under paragraph 12 is reduced. The reduced amount is the amount that would have been payable if the connected company had been treated as a corresponding partner of the relevant owner when calculating the sum of the lower proportions.

The source also explains that this is not an automatic adjustment. A partnership must claim group relief for the reduction in a land transaction return. HMRC says code “12” should be used in the return for that claim.

The relief is described as a modified form of group relief. Although paragraph 27A modifies the normal group relief rules in Part 1 of Schedule 7, the usual group relief conditions in Schedule 7 paragraph 2 still have to be met.

What this means in practice

In practice, this rule can reduce SDLT on certain partnership transactions involving companies within a group structure. Without the exception, the normal paragraph 12 calculation may ignore the company because it is not an individual. That can produce a higher tax charge.

Paragraph 27A softens that result, but only in a specific way. It does not rewrite the whole partnership code. Instead, it reduces the paragraph 12 charge to the amount that would have arisen if the connected group company had counted as a corresponding partner for the “sum of the lower proportions” calculation.

Two practical points matter.

First, the company must satisfy both limbs mentioned in the source: it must be connected to the relevant owner and part of the same group as that relevant owner. The manual does not expand on those tests here, but it makes clear that both are required.

Second, the reduction depends on a claim. If no group relief claim is made in the land transaction return, the reduced charge is not simply applied by default on the basis that paragraph 27A could have applied.

This means the transaction analysis and the return filing position need to match. If the partnership wants the reduced charge, it must identify that paragraph 27A is in point, check that the Schedule 7 group relief conditions are met, and make the claim correctly.

How to analyse it

A sensible way to approach this issue is to ask the following questions in order:

• Is this a partnership transaction where the paragraph 12 calculation and the “sum of the lower proportions” are relevant?
• Would the normal rule produce a higher charge because only an individual can usually be a corresponding partner?
• Is there a company involved that is connected to a relevant owner?
• Is that company also part of the same group as the relevant owner?
• If that company were treated as a corresponding partner, would the paragraph 12 charge be lower?
• Are the usual group relief conditions in Schedule 7 paragraph 2 satisfied?
• Has a group relief claim been made in the land transaction return, using the code specified by HMRC?

This framework shows that the rule has two stages. The first stage is computational: work out whether paragraph 27A would reduce the paragraph 12 charge. The second stage is relief-based: check whether the modified group relief mechanism is actually available and has been claimed.

Example

Illustration: a partnership transaction falls within the paragraph 12 rules. A relevant owner is linked to a company within the same corporate group, and that company is connected to the relevant owner. Under the ordinary rule, the company cannot count as a corresponding partner because it is not an individual. The paragraph 12 calculation therefore produces a higher SDLT charge.

If paragraph 27A applies, the charge is reduced to the amount that would have been payable if the company had counted as a corresponding partner in calculating the sum of the lower proportions. But the partnership only gets that reduction if it makes a group relief claim in the land transaction return and the normal Schedule 7 paragraph 2 conditions are met.

If those conditions are not met, or no claim is made, the partnership cannot assume that the lower figure applies.

Why this can be difficult in practice

The source material is short, but the rule is technically awkward for several reasons.

First, it sits on top of the already complex partnership rules. To use it properly, you need to understand the paragraph 12 calculation, who the relevant owners are, and how the “sum of the lower proportions” works.

Second, the rule mixes two ideas: a deemed computational effect and a relief claim. It is easy to miss that paragraph 27A may point to a lower charge, but the reduction still has to be claimed as group relief in the return.

Third, the source says that the normal group relief conditions still apply, even though the relief is modified. That means you cannot stop at the partnership analysis. You also need to test the Schedule 7 group relief requirements.

Fourth, whether a company is both connected with and in the same group as a relevant owner can be fact-sensitive, especially in structures involving indirect ownership, reorganisations, or changes around the transaction date.

Finally, HMRC’s manual is guidance, not the legislation itself. The legal effect comes from paragraph 27A and the modified interaction with Schedule 7. The manual is useful for understanding HMRC’s view, but the statutory wording remains the starting point if there is doubt.

Key takeaways

• Normally only an individual can be a corresponding partner in the paragraph 12 “sum of the lower proportions” calculation, but paragraph 27A creates an exception for certain companies.
• If a company is connected to, and in the same group as, a relevant owner, the paragraph 12 charge may be reduced to the amount that would have arisen if that company had been a corresponding partner.
• The reduction is not automatic: the partnership must claim group relief in the land transaction return, and the usual Schedule 7 paragraph 2 group relief conditions still need to be met.

This page was last updated on 24 March 2026

Useful article? You may find it helpful to read the original guidance here: Guidance on Group Relief and Exemptions in Stamp Duty Land Tax Calculations

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