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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Special provisions relating to partnerships: Transfers of a chargeable interest from a partnership

Partnership 1 is transferring some of the land it owns to Partnership 2.

A, B, C and D are equal partners in Partnership1 and are unconnected

A has a 20%, B a 60% and E a 20% share in Partnership 2 and are unconnected

This is both a transfer from a partnership to a partner, or connected person, and a transfer to a partnership from a partner, or a partner connected, therefore both Para 10 and 18 apply to the transaction.

In these circumstances, Para 23 provides that where both Para 10 and 18 apply the chargeable consideration will be the Para 10(2) calculation or Para18(2) if greater.

Therefore both calculations need to be carried out to ascertain the higher charge.

Applying Para 10 first

Step One

Identify the relevant owner or owners.

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

B is a relevant owner because, immediately before the transaction, he is entitled to a proportion of the chargeable interest and immediately after the transaction he was a partner.

Step Two

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

A is his own corresponding partner because, immediately after the transaction he was a partner and it was the relevant owner.

B is his own corresponding partner because, immediately after the transaction he was a partner and it was the relevant owner.

(E can not be a corresponding partner as he is not connected to a relevant owner)

Step Three

A is entitled to 25% of the chargeable interest immediately before the transaction.

As he has only one corresponding partner, this proportion is all apportioned to A.

B is entitled to 25% of the chargeable interest immediately before transaction.

As he has only one corresponding partner, this proportion is all apportioned to B.

Step Four

The lower proportion for each person who is a corresponding partner is 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 for A are 25% (the proportion of the chargeable interest attributable to the partner) and 20% (the partnership share attributable to the partner) respectively, so the lower proportion is 20.

The figures for B are 25% (the proportion of the chargeable interest attributable to the partner) and 60% (the partnership share attributable to the partner) respectively, so the lower proportion is 25.

Step Five

We add the lower proportions together, 20 + 25.

As a result, the sum of the lower proportions in this instance is 45.

Chargeable consideration is MV x (100-SLP)%

That is 55% of MV

Applying Para 18 next

Step One

Identify the relevant owner or owners.

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.

B is also 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.

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

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

(E can not be a corresponding partner as he is not connected to a relevant owner)

Step Three

A is entitled to 20% of the chargeable interest immediately after the transaction.

As he has only one corresponding partner, this proportion is all apportioned to A.

B is entitled to 60% of the chargeable interest immediately after the transaction.

As he has only one corresponding partner, this proportion is all apportioned to B.

Step Four

The lower proportion for each person who is a corresponding partner (here A and B) is 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 for A are 20% (the proportion of the chargeable interest attributable to the partner) and 25% (the partnership share attributable to the partner) respectively, so the lower proportion is 20.

The figures for B are 60% (the proportion of the chargeable interest attributable to the partner) and 25% (the partnership share attributable to the partner) respectively, so the lower proportion is 25.

Step Five

The sum of the lower proportions in this instance is 45.

Chargeable consideration is MV x (100-SLP)%

That is 55% of MV

In this example the result of the calculations under both para10 and Para 18 are the same so the charge to SDLT is 55% of MV of properties transferred to Partnership 2.