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HMRC internal manual

Stamp Duty Land Tax Manual

Special provisions relating to partnerships: Transfers of a chargeable interest to a partnership

The steps set out in Para12 are detailed and comprehensive, so before we consider them in any detail, let us consider two relatively straightforward examples, example 1 below and example 2 at SDLTM33540.

Example 1

Individual A owns a chargeable interest (a freehold property, for example) which she wishes to transfer to a partnership of which she is a member. There are two other partners, individuals B and C, with whom partner A is not connected [see SDLTM33410] for the purposes of part 3. Partner A is entitled to a 30% share of the income profits of the partnership.

As a result of the transfer to the partnership, the proportion of the chargeable interest owned by Partner A has decreased from 100% to 30%.

The sum of the lower proportions calculated in accordance with Para12 turns out to be 30. [see SDLTM33550] As a result, the proportion of the market value of the chargeable interest taken as consideration for the purposes of SDLT is (100-30)%, that is 70%. This equates to the proportion of the chargeable interest given up by Partner A which is, of course, identical to the proportion of the chargeable interest acquired by Partners B and C through their interest in the partnership.