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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
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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 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 the purposes of SDLT. The parties are not connected in any other way.

Partners D and E are each entitled to a 30% share of the income profits of the partnership. Partner F being entitled to the balance of 40%.

The sum of the lower proportions in relation to a transaction to which FA03/Sch15/Para18 applies is determined as follows:—

Step One

Identify the relevant owner or owners.

Partner D 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.

Step Two

For each relevant owner, identify the corresponding partner or partners.

Partner D is his own corresponding partner because, immediately before the transaction he was a partner and he was the relevant owner.

Partner E is also a corresponding partner in relation to the relevant owner, Partner D, because, immediately before the transaction she was a partner and she was connected to the relevant owner.

Step Three

For each relevant owner, find the proportion of the chargeable interest to which he is entitled immediately after the transaction.

Partner D is entitled to 100% of the chargeable interest after the transaction.

Apportion that proportion between any one or more of the relevant owner’s corresponding partners. Let us apportion the proportion 50% to Partner D and 50% to Partner E.

Step Four

Find the lower proportion for each person who is a corresponding partner in relation to one or more relevant owners.

The lower proportion is the proportion of the chargeable interest attributable to the partner, or if lower, the partnership share attributable to the partner. Here, this is the lower of 50% and 30%, for both Partners D and E.

Step Five

Add together the lower proportions of each person who is a corresponding partner in relation to one or more relevant owners.

Here, this means adding 30% (Partner D) and 30% (Partner E), to obtain 60% as the sum of the lower proportions. As before this means that the proportion of the market value chargeable is (100 - 60) % , that is 40%.