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HMRC internal manual

Stamp Duty Land Tax Manual

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

Example 2

A partnership owns a chargeable interest (a freehold property, for example) which it wishes to transfer to a partner, individual D. There are two other partners, individuals E and F. Partner D is not connected with Partner F for the purposes of part 3, schedule 15, but he is married to Partner E, so is connected with her for purposes of SDLT. The parties are not connected in any other way.

Partner D’s partnership share is 30%. Partner E is also entitled to 30%, with Partner F being entitled to the balance of 40% - see SDLTM33770.

Partner D has again acquired 70% of the chargeable interest: the same proportion that was previously owned by Partners E and F, through their interest in the partnership.

The computation of the sum of the lower proportions does not, however, result in the same figure as before. The difference arises because of the connection between Partners D and E. In this instance, the SLP is calculated by reference not only to the proportion owned by Partner D prior to the transfer, but also by the share owned by his wife. As a result, the sum of the lower proportions is 60 - see SDLTM33770.

The end result is that the proportion of the market value chargeable as consideration for the purposes of SDLT is (100-60) % that is 40%. This equates to the proportion of the chargeable interest not previously owned by Partners D and E together. It is also identical to the proportion of the chargeable interest held prior to the transfer by Partner F through his interest in the partnership.