Special provisions relating to partnerships: Transfers of a chargeable interest from a partnership
A partnership owns a chargeable interest (a freehold property, for example) which it wishes to transfer to a partner, individual A. There are two other partners, individuals B and C. None of the partners are connected to each other for the purposes of schedule 15. Partner A is entitled to a 30% share of the income profits of the partnership.
The sum of the lower proportions in relation to a transaction to which Para18 applies is determined as follows:
Identify the relevant owner or owners.
Partner A is a relevant owner because, immediately after the transaction, he is entitled to a proportion of the chargeable interest and immediately before the transaction he was a partner.
For each relevant owner, identify the corresponding partner or partners.
Partner A is his own corresponding partner because, immediately before the transaction he was a partner and he was the relevant owner.
Partner A is entitled to 100% of the chargeable interest immediately after the transaction.
As there is only one corresponding partner, this proportion is all apportioned to Partner A.
The lower proportion for each person who is a corresponding partner, here just Partner A, as the proportion of the chargeable interest attributable to the partner, or if lower, the partnership share attributable to the partner.
In this case the figures are 100% and 30% respectively, so the lower proportion is 30.
We just have one lower proportion, so there is nothing to add together. As a result, the sum of the lower proportions in this instance is 30.
Hence, the proportion of the market value of the chargeable interest chargeable as consideration for the purposes of SDLT is (100-30) %, that is 70%.
This equates to the additional proportion of the chargeable interest acquired by Partner A which is, of course, identical to the proportion of the chargeable interest previously held by Partners B and C through their interest in the partnership.