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HMRC internal manual

Stamp Duty Land Tax Manual

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

Now let us calculate the sum of the lower proportions in example 1 [see SDLTM33530] by applying the relevant legislation in Para12 to the information given.

The facts of example 1 were that 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 for the purposes of part 3, schedule 15. Partner A is entitled to a 30% share of the income profits of the partnership.

Consider the steps within Para 12 in turn.

Step One

As Partner A was entitled to a proportion of the chargeable interest immediately before the transaction and she is a partner immediately after the transaction, she is a relevant owner.

Prior to the transaction, only Partner A was entitled to a proportion of the chargeable interest, so she is the only relevant owner.

Step Two

We only have one relevant owner for whom we have to identify the corresponding partner or partners.

Partner A is her own corresponding partner. She qualifies as such because, immediately after the transaction, she is a partner and she is the relevant owner.

Neither Partner B nor Partner C qualify as corresponding partners in relation to Partner A because, even though the they are partners immediately after the transaction they are neither the relevant owner nor an individual connected with the relevant owner.

Step Three

Partner A was entitled to 100% of the chargeable interest immediately before the transaction. Therefore we will apportion 100% to Partner A.

Step Four

100% was apportioned to Partner A under Step 3.

Partner A’s partnership share immediately after the transaction was 30%.

As a result, the lower proportion is 30.

Step Five

Here there is only one relevant owner and only one corresponding partner, so there is nothing to add together.

The sum of the lower proportions is therefore 30.