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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: Partnership Interests: application of provisions about exchanges etc.

Partners A & B (not connected persons) each have 50% partnership share in a partnership which owns two farms. The partners decide to go their separate ways, A takes one farm and B takes the other, with A paying £100,000 equality money.

The provisions of para18 will apply to the transaction and the charge to SDLT will be determined with regard to the market value of each farm and the sum of the lower proportions.

First we need to ascertain the SLP under Para 20, [see SDLTM33750] for each partner.

Firstly in respect of A:

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.

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 he is the relevant owner.

(NB B is not a corresponding partner as although he was a partner before the transaction he is not connected to A so does not meet the test at Step Two (b)).

Step Three

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 A.

Step Four

The lower proportion for each person who is a corresponding partner (A in this instance) 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 are 100% (chargeable interest attributable to the partner) and 50% (the partnership share attributable to the partner respectively), so the lower proportion is 50.

Step Five

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 50.

The chargeable consideration will be MV x (100-SLP)%

Here that is MV x 50%.

Then in respect of B:

As the partnership shares are identical, each step is the same, therefore the chargeable consideration will be MV x 50%.