Property Tax Structures

Partnership Property UK

FA 2003 Sch.15 SDLT on partnership transactions; sum of lower proportions formula; connected persons charge (s.53); CGT transparency at partner level; income tax and finance cost restriction; incorporating a property partnership.

15 min readUpdated 8 June 2026Last reviewed: 17 May 2026partnershipsdltcgtproperty-tax

CGT Transparency — Partner Level Taxation

A partnership is transparent for CGT — each partner is taxed on their share of any gain. Each partner applies their own annual exempt amount and CGT rate. BADR does not apply to property investment partnerships. Changes in profit-sharing ratios create deemed disposals and acquisitions.

SDLT on Partnership Transactions — FA 2003 Schedule 15

The 'sum of lower proportions' formula calculates SDLT only on the proportion of the property that economically transfers to other partners — preventing double-charging on the transferor's retained interest. The s.53 connected persons charge prevents undervalue transfers between connected persons.

Income Tax on Partnership Property Income

Income is allocated by the profit-sharing agreement; each partner files their share in self-assessment. The Section 24 finance cost restriction applies to individual partners in residential property partnerships. A corporate partner is not subject to the individual finance cost restriction.

Incorporating a Property Partnership

There is no general SDLT relief for incorporation of a property partnership. TCGA 1992 s.162 incorporation relief requires a trading activity — a property investment partnership does not qualify. S.165 holdover relief is equally unavailable. CGT is typically crystallised on incorporation of a property partnership.

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