LTT partnership transfers: the connected company rule
Connected companies and partnership LTT
A company may be included in the SLP calculation where it would otherwise qualify, but is excluded only because it is not an individual.
- The company and original owner must be in the same group.
- The result is a reduced calculation, not necessarily no LTT.
- Modified group-relief restrictions can still apply.
Scroll down for the full analysis.
Read the original guidance here:
LTT partnership transfers: the connected company rule
A company can sometimes reduce Land Transaction Tax when land moves into a partnership. Land Transaction Tax (LTT) replaced stamp duty land tax in Wales in 2018. Where the normal calculation leaves a company out solely because it is not an individual, this rule can address the resulting gap when land moves into a partnership. That exclusion can matter.
What this rule is about
When land goes into a partnership, LTT uses a calculation called the sum of the lower proportions, or SLP. In simple terms, it compares who owned the land before with each partner’s share after the transfer.
Only individuals normally count. To count as corresponding partners, they must be connected with the former owner. That can produce a higher LTT bill where the matching person is a company instead.
What the official source says
According to the Welsh Revenue Authority, a special reduction may deal with that gap. Under the law, the tax becomes the amount that would have been due if the connected company had counted in the SLP calculation.
- The transfer must be one into a partnership where the SLP rules apply.
- The company must otherwise have met the test for a corresponding partner.
- It must fail that test only because corresponding partners normally must be individuals.
- The company and the original owner must be in the same corporate group.
- The modified group-relief rules also apply to the reduction.
What this means in practice
This is not a separate choice to ignore LTT. When the company would otherwise satisfy every corresponding-partner condition except the individual requirement, the rule lets the taxpayer treat it as the matching partner for this limited purpose. Instead, it changes the calculation.
The revised SLP determines the tax. It may not eliminate tax at all.
- Check the ownership of the land just before it enters the partnership.
- Check who becomes or remains a partner after the transfer.
- Work out the SLP once under the normal rule and once with the company included.
- Keep records showing that the companies are in the same group.
How to analyse it
Start with the normal partnership calculation. Do not begin with the company structure. The company rule only helps if the ordinary SLP calculation is the one that applies.
- Is land being transferred into a partnership?
- Who was entitled to the land immediately before the transfer?
- Who are the partners immediately after it?
- Would the company be a corresponding partner in every respect except that it is a company?
- Are the company and original owner in the same group under the statutory ownership test?
- Do any arrangements restrict the modified group-relief result?
- Could a later group change trigger a withdrawal of the reduction?
Example
Illustration: Before the transfer, A Ltd owns 60% of land. After the transfer, A Ltd has a 60% share of the partnership profits. A Ltd would match the original owner in the calculation, but the normal rule excludes it because it is a company.
If A Ltd and the original owner are in the same group, the calculation can include A Ltd instead because it would otherwise match the original owner despite being a company. That revised calculation sets the reduced tax.
Why this can be difficult in practice
Often, the key issue is not whether two companies look connected. Instead, the statutory group test looks at rights to share capital, profits and assets on a winding-up. A group chart alone may not tell the full story.
Because group-relief restrictions also carry across, with specific changes, a planned ownership or control change can affect the reduction after the transfer as well as on the day it happens. Later changes can matter too.
- Common directors do not by themselves prove that companies are in the same group.
- A company must be excluded only because it is not an individual.
- The partnership profit shares must be checked at the relevant time.
Key takeaways
- This rule can lower LTT on a transfer into a partnership.
- It helps only where a connected company is otherwise a matching partner.
- Corporate group evidence and future plans both matter.
Technical analysis
For advisers, and for anyone who wants to check the law behind this page. You do not need this section to understand the guidance above.
Legislation
- LTTA 2017 Schedule 7 para 13 — tax calculation for transfers into partnerships
- LTTA 2017 Schedule 7 para 14 — steps for working out lower proportions
- LTTA 2017 Schedule 7 para 16 — who can be a corresponding partner
- LTTA 2017 Schedule 7 para 41 — connected company reduction for partnership transfers
- LTTA 2017 Schedule 16 para 2 — group relief for company land transfers
- LTTA 2017 Schedule 16 para 3 — when companies are in the same group
- LTTA 2017 Schedule 16 para 4 — arrangements that restrict group relief
- LTTA 2017 Schedule 16 para 8 — when group relief can later be withdrawn
Official guidance
The pages below are the Welsh Revenue Authority’s guidance. Guidance is not law. It sets out how the Welsh Revenue Authority reads the legislation, and it is not binding on you, on a tribunal or on a court. Where guidance and the legislation differ, the legislation wins. the Welsh Revenue Authority can also change or withdraw guidance, and it may not cover your facts.
- Welsh Revenue Authority, Partnerships and Land Transaction Tax technical guidance: Sum of the lower proportions: connected companies
Where this is not settled
- Whether a company would otherwise be a corresponding partner depends on the partnership facts immediately after the transfer.
- Group status depends on ownership and rights to profits and assets, not simply on companies having common directors or a similar name.
- The supplied statutory library does not record a currency date, so the current text should be checked before relying on this rule for a live transaction.
Evidence you would need
This kind of case is decided on the facts of the individual property. These are the records that usually settle it, and the ones an adviser would ask you for.
- The ownership of the land immediately before the transfer
- The partnership agreement and partners’ profit shares immediately after the transfer
- The corporate group chart and share rights
- Documents showing any planned sale, funding or control change
Explore this with an AI
Readers often want to test their own situation. Copy the prompt below into ChatGPT, Claude or Gemini. It hands the model the actual legislation for this page rather than letting it answer from memory, and tells it to be explicit about what is uncertain. What comes back is information, not advice – check it against the links above.
I am researching Land Transaction Tax (LTT), the tax on property in Wales. It replaced Stamp Duty Land Tax in Wales on 1 April 2018, and SDLT does not apply in Wales. MY QUESTION LTT partnership transfers: the connected company rule [Replace this with your own situation: what you are buying, the price, the dates, who the buyer is, and what you plan to do with the property.] THE LAW THIS TURNS ON - LTTA 2017 Schedule 7 para 13 - tax calculation for transfers into partnerships https://www.legislation.gov.uk/anaw/2017/1/schedule/7/paragraph/13 - LTTA 2017 Schedule 7 para 14 - steps for working out lower proportions https://www.legislation.gov.uk/anaw/2017/1/schedule/7/paragraph/14 - LTTA 2017 Schedule 7 para 16 - who can be a corresponding partner https://www.legislation.gov.uk/anaw/2017/1/schedule/7/paragraph/16 - LTTA 2017 Schedule 7 para 41 - connected company reduction for partnership transfers https://www.legislation.gov.uk/anaw/2017/1/schedule/7/paragraph/41 - LTTA 2017 Schedule 16 para 2 - group relief for company land transfers https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/2 - LTTA 2017 Schedule 16 para 3 - when companies are in the same group https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/3 - LTTA 2017 Schedule 16 para 4 - arrangements that restrict group relief https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/4 - LTTA 2017 Schedule 16 para 8 - when group relief can later be withdrawn https://www.legislation.gov.uk/anaw/2017/1/schedule/16/paragraph/8 Guidance page from the Welsh Revenue Authority on this topic (guidance, not law): https://www.gov.wales/partnerships-and-land-transaction-tax-technical-guidance HOW I WANT YOU TO ANSWER 1. Work from the legislation above. Read it before answering. Guidance from the Welsh Revenue Authority is its view of the law, not the law, and does not bind a tribunal or a court. 2. Tell me what the rule actually requires, in plain English. 3. Tell me which facts decide the answer, and which facts would change it. 4. Tell me what evidence I would need to support the position. 5. Be explicit about anything unsettled or fact-sensitive. Do not guess. 6. Your training data has a cutoff and SDLT rates and reliefs change at fiscal events. Say so if you are not sure the law is current. POINTS ALREADY KNOWN TO BE UNCERTAIN ON THIS TOPIC - Whether a company would otherwise be a corresponding partner depends on the partnership facts immediately after the transfer. - Group status depends on ownership and rights to profits and assets, not simply on companies having common directors or a similar name. - The supplied statutory library does not record a currency date, so the current text should be checked before relying on this rule for a live transaction. Do not give me a conclusion you cannot support from the provisions above.
Legislation links show the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017 as it stood on 2025-11-17. The law may have changed since, and the rules that apply are those in force on the date of your transaction. The official guidance this page is based on is here.
This page was last updated on 4 September 2026
Useful article? You may find it helpful to read the original guidance here: LTT partnership transfers: the connected company rule
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